The line at the TARP door gets longer and longer (via IHT):

The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.

This is one of the many reasons I’ve opposed the various bailouts of the last year. Businesses that expect to bailed out by the government don’t take the actions necessary for the economy to recover. The recession is just prolonged as businesses hang on to business models that no longer make sense in the hope that the government will ride to their rescue. The time, effort and money spent on lobbying is not being spent productively.

It also means that the government is picking winners and losers in the economy. The large banks that got the first capital injection have gained an advantage over the smaller banks. Ironically, it was the big banks that got us into this mess and in a just world the smaller banks would benefit as the larger ones scaled back or failed. With the government intervention, the smaller banks that were well managed end up at a disadvantage.

“The biggest surprise was how quickly it went from ‘I don’t need this,’ to ‘How do I get in?’ ” said Michele Davis, the head of public affairs at the Treasury, who is Mason’s boss.

Where do we draw the line?

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