A little over a week ago Wonks Anonymous observed that the then $350 billion, soon to be $700 billion financial sector bailout, was simply an exchange of taxpayer's good assets for banks bad assets. He was of the opinion that, while this transfer did prevent a collapse of the banking system, it would do little to promote the flow of credit to the economy and stimulate recovery.

Today's Times reports on the responses of bankers to this singular act of public charity.

Most of the banks that received the money are far smaller than behemoths like Citigroup or Bank of America. A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.

Speaking at the FBR Capital Markets conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury.

“With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.”

The phrase welfare queens comes to mind.

But let's not dwell on the past. We will not get this money back in the short run and it seems that we will need to spend some more on these fools. We need to plan for a long term recovery of our money as part of a long run balanced budget strategy.

Wonks Anonymous would propose a financial transactions tax. We should charge one tenth of a cent on every dollar of every financial transaction - loans, purchases of loans, stock sales, sales of securities etc. The tax would have two impacts. It could bring in enormous revenue and it would most certainly cool down our overly responsive capital markets where the daily and even hourly purchase and resale of assets is commonplace.