So President Obama chides the bankers on CBS’s 60 Minutes Sunday night, referring to them as “fat cats”.  On Monday morning he meets with them  – at least the ones who showed up – to tell them they need to step-up their lending.  What was their response?

Some of those in attendance said the government should “cut the red tape” in lending requirements for Small Business Administration (SBA) loans.

WTF?

We just gave these guys trillions of dollars interest-free in March of this year to lend back to Americans in order to prop up the economy.  Then they hoard the money, investing it in everything from bonds (very conservative returns), to credit card holders (then turned around and raised interest rates to all-time highs), to high-risk derivatives – you know, those insane and arcane financial instruments that broke the casino the last go around.  Thereafter, they paid themselves handsome bonuses for their genius (listen, give me a boatload of $$$ interest free and I can make a profit on it investing in high-grade bonds – the “spread” of 2% interest is a no-brainer; let’s see, 2% of $35 Billion – wow, nice freakin’ bonus, Lance; you are such a genius). 

Now when pressed to lend the money, they have the audacity to suggest that the government-backed SBA loans are the way to go about fixing this mess.  Let’s see.  I will loan the money you just gave me interest free to small businesses.  You guarantee 80% of the loan.  I get the borrower to pledge his business as an asset to back up the remaining 20%, of course, making sure that the appraised fire-sale value of the “hard assets” – real estate, equipment, etc, far exceeds the other 20% of the total loan.   Even if the deal goes South, the government pays me 80% of the money back (which they gave to me interest free, anyway), and I sell the business for 20 cents on the dollar and recover the other 20%.

What a deal!  I take NO risk, and get all of the rewards.  Isn’t Capitalism great?

Mr. President.  Wake up!!!  These guys are sandbagging us.  Good will has left the building.  The last remnants of Capitalism are gone, buried along side Adam Smith, who is rolling over in his grave as I speak.

P.S.  For those not familiar with Adam Smith, he was the author of Wealth of Nations – the book written in 1776 where he first forwarded the economic theory of Capitalism.