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PATTERSON: Banking on green energy
Bailed-out BOA returns favor to Uncle Sam’s renewables
Question of the Day
How do you know a bank is in trouble? When it suddenly jacks up fees or imposes new ones capriciously, that’s usually a flashing red light. For example, last year, Bank of America (BOA) suddenly announced it would charge customers a $5 fee for using their debit cards. Though the bank backed off that plan after a public outcry, the Wall Street Journal reported in March that the bank was still considering requiring “many users of basic checking accounts to pay a monthly fee unless they agree to bank online, buy more products or maintain certain balances.”
As if that weren’t bad enough, earlier this year, mortgage giant Fannie Mae, that paragon of fiscal prudence, announced it was cutting off Bank of America from selling loans because the bank was failing to honor repurchase requests in a “timely” fashion. When an institution that contributed to the 2008 financial meltdown with its profligate lending calls you out, you know you’ve got problems.
So it seems a little more than strange that BOA is proudly claiming it will spend upward of $50 billion over the next 10 years to help fight “climate change.” BOA Chief Executive Brian T. Moynihan explained the new initiative, which will include promoting renewable-energy platforms such as wind and solar as a benefit to BOA customers: “Environmental business delivers value to our clients, return for our shareholders and helps strengthen the economy.”
This is on top of a previous 10-year, $20 billion commitment to the Great Green Cause, which the bank says it is on track to complete ahead of schedule. That previous effort included “$5 billion on renewable energy projects, including helping the San Jose Unified School District in California to run on solar energy. An additional $1 billion went to consumer financing of hybrid vehicles,” according to Dow Jones.
So why would a bank hard-up enough for cash to risk repeatedly shaking down its customers want to waste $50 billion? Let’s not forget that BOA received a $45 billion bailout from the taxpayers at the height of the financial crisis, then got another helping hand from Uncle Sam in January 2009 to help cover the losses it suffered as a result of acquiring Merrill Lynch.
True, BOA has since repaid its bailout funds, but that is hardly the point. The point is that when government props up failing or failed businesses, it leads to a natural distrust of both business and government. Somewhere, someone is reading news of BOA’s new and wildly generous commitment to green energy and wondering if it is the price, tacitly or implicitly, for government largesse.
It would not be idle speculation. The green-energy boondoggle has been a failure as a business model - wind and solar power are vastly more expensive to produce and buy and far less reliable to use, than good old-fashioned fossil fuels. As Myron Ebell, director for the Center for Energy and Environment at the Competitive Enterprise Institute, told me, the only reason companies get involved in this nonsense at all is because the government both mandates and subsidizes it. Government sauce is the only gravy on this train.
Even if the government has nothing to do with BOA’s green commitment, it’s still a colossally bad idea - an institution that was in dire straits that recently required assistance from the feds is throwing tens of billions of dollars down the global-warming sinkhole. It just goes to show the real danger that the modern environmental movement poses by persuading us to waste money we don’t have.
Matt Patterson is the Warren T. Brookes fellow at the Competitive Enterprise Institute and senior editor at the Capital Research Center.
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