Law Professor: “We’re Going To Have Casinos In Las Vegas Reconstituting Themselves As Bank Holding Companies and Applying for Government Loans”

An article by McClatchy includes two must-read quotes on the bailout:

“I could say I told you so,” said Rep. Joe Barton, R-Texas, who helped lead a revolt against GOP leaders and sunk the $700 billion plan on its first pass. “It was so open-ended and we put so little accountability into it, they can basically do whatever they want to with the money.”

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John Coffee, a law professor at Columbia University in New York and adviser to Wall Street regulators, said the government missed an opportunity by taking equity stakes in banks without attaching requirements that they use the bailout funds for new loans to spur the economy.

“If we could do this all over again . . . you could have conditioned the loan (plan) on how the proceeds could be used,” he said. “Some banks are still hoarding the money . . . and others simply are not interested in lending in areas where they classically lent, like construction lending, because they see a major recession coming. . . .

“Before this is over that we’re going to have casinos in Las Vegas reconstituting themselves as bank holding companies” and applying for government loans, Coffee warned.

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