Did you ever doubt it?

In Friday's New York Times, business writer Joe Nocera gives an account of a recording of an October 17 employee-only conference call at JPMorgan Chase. This was just four days after the feds had pumped $25 billion into the company. Near the end of the call, an employee referred to the funding and asked: “What effect will that have on the business side and will it change our strategic lending policy?”

The JPMorgan executive who was moderating the employee conference call didn’t hesitate to answer a question that was pretty politically sensitive given the events of the previous few weeks. ...

“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

That is, he answered directly and bluntly that the money was not going to be used to open up additional credit but to buy more banks. In fact, Nocera says, at another point in the conference call this same executive said that “loan dollars are down significantly” and would drop further "as we continue to tighten credit.”

The whole effing business is not about homeowners, not about consumers, not about getting credit flowing again. It's about the damn banks.

Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation[, Nocera writes]. As Mark Landler reported in The New York Times earlier this week ... Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers.

As if specifically to prove the point, on Friday PNC announced it is purchasing National City - and the tax break will help to finance the deal by allowing it to deduct any losses on National City’s books. Plus, also to finance the deal, it is using $7.7 billion of the bailout fund. That money could have gone toward saving National City. Instead it's being used to, in effect, pay PNC to take it over.

I don’t know about you, [Nocera concludes,] but I’m starting to feel as if we’ve been sold a bill of goods.

Starting?

Thanks to TalkingPointsMemo for the link.