Free Money?
I was just reading the following over at the Washington Post:
The Treasury on Thursday offered six life insurers capital infusions under the Troubled Assets Relief Program. The precise terms of the proposed investments have not yet been negotiated.
All of the life insurers that received the offers have stock that is publicly traded, providing a constant measure of investor confidence. They had to apply for the money by last November, and some took other steps to shore up their finances during the long wait for Treasury approval.
Now it appears that some companies including Ameriprise Financial will be declining the funds. Decline free money? Now on the surface that may not seem very logical but like most things in life, the funds come with some hidden costs. The Washington Post article speculates that one main consideration may be that the funds come with restrictions on executive pay. Now that may be a factor but frankly I’d have to suspect that possible dilution of the company’s stock value is a bigger concern. After all, if stockholders see their stock prices decline, they are more likely to vote out the CEO and other key officers.
What is more interesting is that most of these companies are deciding they just don’t need the money because they are not financially strapped. If that is the case, why are they being offered the money? If the Government has funds to give out, what about more ways to send funds to small businesses which are likely to be decimated in numbers by the time this economy turns around.
The current administration continues to help out the industry giants who severely mismanaged funds while almost completely ignoring the Mom & Pop shops who continue to face squeezes on their credit lines and credit rates. This at a time when revenues are down is just going to kill many businesses and further increase this nation’s unemployment rate.
If only some of that attention and financial assistance that big companies are being offered who don’t need it were directed to small business, we just might see this economy pull out a bit faster.