Trustmark Corp. Asking for $215 Million from Bailout Fund

Here’s another clear example of why the bailout bill was a terrible idea:

If cleared for $215 million in federal funds, Trustmark Corp. plans to invest in both small and large companies, make consumer loans and expand.

Though the funds would come from the $700 billion federal bailout package, Trustmark’s chief executive said the bank remains healthy and simply wants to take advantage of attractively priced capital.

“Trustmark does not need to do this. It’s one of the stronger capitalized banks and above the median of the banks our size in America,” said Richard Hickson, chairman and chief executive officer.

(Full article here)

We’ve essentially made available unbelievably cheap capital to whichever firms claim they need it the most. Since the guidelines for how this money is to be spent are basically non-existent, or extremely blurry at best, who knows how this cash injection will be spent by the feds?

For publicly traded companies, the executives are required to do everything in their power to attain a profit for their shareholders, so long as the action fits within the company charter and is deemed a good course for the company. When there is “free” money to be had, it’s the company’s responsibility to go after it. Doing otherwise would violate the agreement made with the shareholders.

So, when the government opens this cycle of selective intervention, it opens the door to money grabs by every possible organization that can get their hands on it. We are putting our trust in the federal government to spend our money wisely and choose which companies should receive our tax dollars. If this option wasn’t there, I’d wager that most of these companies would survive just fine, albeit with some structural changes, cutbacks, and layoffs.

Would that hurt the economy? In the short term, probably. But, what we’re engaged in now is simply a short-term band-aid at best, and pure immoral and unethical behavior at the very least. What right do Paulson and Bernanke have to decide who lives and who dies in the corporate world? Do they truly have all the facts they need to make wise decisions about the millions of corporations we have? I doubt it.