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While I am no fan of the megabanks because I believe them to be guilty for their role in our country's economic meltdown of 2007/2008, neither can I subscribe to the overwrought emotionalism directed against them. One aspect of that emotionalism has to do with the TARP bailouts; some posters here act like the taxpayers just gave the banks a gift, totally ignoring the fact that TARP was not a gift, that it has been largely repaid, and that it came with strings which held the banks' feet to the fire in terms of bolstering their finances and limiting their executive compensation. Those strings were one reason the banks were so eager to pay the money back.
An article in the business section of the Los Angeles Times of September 30, 2011, states: "Most banks have repaid their TARP money. As of Aug. 31, the Treasury had received $183 billion of the $205 billion distributed to financial institutions. The Treasury also got $26 billion from dividends, interest and stock, resulting in a slight profit for the program."
Here is the timeline on which the megabanks repaid their TARP money:
June 2009: JPMorgan Chase and Goldman Sachs
December 2009: Bank of America, Wells Fargo and Citigroup
February 2010: PNC
What the article does not say, and what I would be interested to know, is the names of the banks still owing TARP money and the amounts owed by each. The idea of government bailing out private firms is indeed distasteful, but I am trying to bring some factuality to the discussion of TARP. Calling it corporate welfare is not entirely wrong, but is at the very least misleading; the common understanding of the word "welfare" does not include the money being paid back, which to me is the bottom line.
Hi Escort Rider,
There is no good way to put it except that you fell for it. If you drain the pond, all the fish are flopping on the ground. The first to get liquidity again swim first. They are the early adopters in a depressed market. Their competition is still flopping around while they mop every thing of value up. This action injects money into the general market which creates a feedback loop of profit. Why do you think money later is of the same value as money now? You completely fell for just as they knew many of you would.
Agreed, Too Big To Fail is a disastrous precedent and the consolidation into even larger institutions leaves us worse off than we were before. I'm fine with these megabanks making money, but when we socialize the losses so that they only experience the rewards and not the failure, there is a problem. Just looking at the repayment of TARP funds misses the bigger point.
Hi msdmoney,
How would they even fail? Did the building crumble? Did the ATMs explode? They should have gone bankrupt with all assets going to their creditors. The creditors would then likely find that keeping the doors open is their best option.
Hi Escort Rider,
There is no good way to put it except that you fell for it. If you drain the pond, all the fish are flopping on the ground. The first to get liquidity again swim first. They are the early adopters in a depressed market. Their competition is still flopping around while they mop every thing of value up. This action injects money into the general market which creates a feedback loop of profit. Why do you think money later is of the same value as money now? You completely fell for just as they knew many of you would.
You have made a clever analogy, but that doesn't mean it accurately describes what happened. Did you scan through the link of all 900-plus recipients of TARP money? The largest banks were not the only ones receiving it, by a long shot. I was amazed at how many smaller institutions got smaller amounts.
It is easy to shift focus and paint me as a fan of the TARP bailouts. I think there are enormous problems, including precedence as already pointed out in this thread by someone else. My point was and remains that TARP was not a gift in the sense that the money was just given and that was that. If the interest should have been higher, then you can argue that the difference between the interest charged and the interest as you think it should have been was a gift. I go along there.
Many posters on CD have written as if TARP funds were just gifts, instead of loans that were required to be paid back with interest. That false idea is what I was rebutting.
Your idea that bankruptcy of the megabanks (which you explained in another post which I did not quote above) would have had such benign consequences is an interesting one. I have my doubts, but it is hard to judge hypotheticals like that one.
You have made a clever analogy, but that doesn't mean it accurately describes what happened. Did you scan through the link of all 900-plus recipients of TARP money? The largest banks were not the only ones receiving it, by a long shot. I was amazed at how many smaller institutions got smaller amounts.
It is easy to shift focus and paint me as a fan of the TARP bailouts. I think there are enormous problems, including precedence as already pointed out in this thread by someone else. My point was and remains that TARP was not a gift in the sense that the money was just given and that was that. If the interest should have been higher, then you can argue that the difference between the interest charged and the interest as you think it should have been was a gift. I go along there.
Many posters on CD have written as if TARP funds were just gifts, instead of loans that were required to be paid back with interest. That false idea is what I was rebutting.
Can't argue that. Of course they were clueless. Some of them cannot even write a check anymore but think they know all about banks. I heard everything from hyper inflation to the FOMC's new line of ghetto jewelry. TARP was a book keeping move to keep banks from violating accounting rules that would otherwise close the bank. In return we got mortgage junk that the FED monetized.
Quote:
Your idea that bankruptcy of the megabanks (which you explained in another post which I did not quote above) would have had such benign consequences is an interesting one. I have my doubts, but it is hard to judge hypotheticals like that one.
Doesn't matter if some of the smaller one's were bailed out. The financial industry was bailed out for no reason because there is an alternative. The ones that were not, just missed the high interest gravy during the boom time. So you are looking a manipulation big or small with only the ones that played it square losing. It did not set things right at all.
We run a hybrid monetary system of public/private money creation. Since the speculative private money pushers clearly made a train wreck, why bother? Kill that crap off. All they had to do is stoke the public money creation engine, and let the consumer demand allocate our goods and services. I explained how the tax holiday and increase of interest rates(the opposite of what we are doing) would have corrected this. Its swaps private money with public money. If that wouldn't work, its basically saying the average American doesn't know what he needs or wants more than a few bankers who will make the right speculative loans.
You also miss the fact that the banks have been made whole to do some nice carry trade at the expense of the rest of us. Nice that they can make cheap loans overseas because those same scum bags buried us over here. Its worse than most people realize let alone your spin. Reminds me of Goldman Sachs "profits". Yeah they made AIG the patsy who was bailed by tax payers which then bailed out GS. Then we saw the clowns selling GS as sunshine. How about that kind of guarantee for people that buy annuities? Nope, ain't gonna to happen.
Its privately created fractional reserve money/credit vs interest free public created credit. Which money do we want to print to replace sub prime created money? Well "we" decided to stick with the money that the banks create because the banks run our "da guberment." I mean what do we expect? Bankers to encourage the free competition?
But we are lost because too many of you just don't get it.
Actually i hated the bailouts as they deserved to fail. Bt I have to say it proably saved the econmy and the big banks have paid the TARP funds back with ionterest according to Geithner.But the second half of TARP that was for hosuing was wasted on GM and Chrysler .Then of course the so called jobs program of shovel readt infrastructure spending.No more funds without clear direction on spoending by congress. At least Bush spoent the first half as he said on saving the banking system.Now we have seen worse thaqn the bailouts in pickig winners ansd losers more programs. loo at that molney gone i solor panels;the GM and Chrysler loans plus bankrupsy forced tersm. Then look at the results around you;failed polcies and debt.
One thing many of you are forgetting is the fed did allow a mega bank to fail aka Lehman Brothers. When the ripple effects were determined to be catastrophic, the fed intervened.
Was it the right thing to do? I don't have a crystal ball but if I did it would probably say that time will tell and that overall economically it was a better decision than allowing the banks to stop lending to each other and have investors try to retrieve what little of their over leveraged funds remained.
One thing many of you are forgetting is the fed did allow a mega bank to fail aka Lehman Brothers. When the ripple effects were determined to be catastrophic, the fed intervened.
Was it the right thing to do? I don't have a crystal ball but if I did it would probably say that time will tell and that overall economically it was a better decision than allowing the banks to stop lending to each other and have investors try to retrieve what little of their over leveraged funds remained.
Yeah like McDonalds(Goldman Sachs) is going to weep for Burger King(LB). You are forgetting a prime directive to kill the competition and of course scapegoat someone. Like I said before, it worked like a charm on all the suckers.
That was not catastrophic. There are two ways to print money as I so exhaustively explained. What has been catastrophic is the the policy afterwords of low interest rates, not allowing the defaults, and not lowering taxes. Yeah I'd say that has been a recipe for annihilation.
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