Obama Refuses Tarp Pay-Back

Discussion in 'Politics' started by Burp, Apr 4, 2009.

  1. Burp
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    Burp Always carry, never tell

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    Why would he do that?

    Here is why:

    I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back?

    My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell 'em what to do. Control. Direct. Command.


    It is not for nothing that rage has been turned on those wicked financiers. The banks are at the core of the administration's thrust: By managing the money, government can steer the whole economy even more firmly down the left fork in the road.

    If the banks are forced to keep TARP cash -- which was often forced on them in the first place -- the Obama team can work its will on the financial system to unprecedented degree. That's what's happening right now.

    Here's a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

    Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with "adverse" consequences if its chairman persists. That's politics talking, not economics.

    Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can't a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can't special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit -- until now.

    Which brings me to the Pay for Performance Act, just passed by the House. This is an outstanding example of class warfare. I'm an Englishman. We invented class warfare, and I know it when I see it. This legislation allows the administration to dictate pay for anyone working in any company that takes a dime of TARP money. This is a whip with which to thrash the unpopular bankers, a tool to advance the Obama administration's goal of controlling the financial system.

    After 35 years in America, I never thought I would see this. I still can't quite believe we will sit by as this crisis is used to hand control of our economy over to government. But here we are, on the brink. Clearly, I have been naive.

    Barack Obama Maintains Control Over Banks By Refusing to Accept Repayment of TARP Money - WSJ.com
     
  2. DamnYankee
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    DamnYankee No Neg Policy

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    Four of the smaller banks returned TARP funds.

    [excerpt]
    Signature Bank of New York said on Tuesday that it had repaid $120 million to the Treasury Department. Old National Bancorp of Indiana returned $100 million, Iberiabank of Louisiana paid back $90 million, and Bank of Marin Bancorp of Novato, Calif., repaid $28 million. All of the banks paid 5 percent interest on the money they had received.

    The four banks were the first to announce that they had returned money from the Troubled Asset Relief Fund, or TARP. The Treasury Department has set aside $250 billion to prop up the banking system, with about half of that money given to the eight biggest banks. About 500 small banks have received $73.7 billion.

    But the purpose of the TARP money and the public perception of the fund have changed since then.

    What was billed as a program intended to help healthy banks increase lending and swallow up troubled rivals widened to include a number of struggling banks. New restrictions on executive compensation and dividend payouts made such aid less palatable to bank managers.

    “We don’t want to be touched by the stigma attached to firms that had taken money,” said Scott A. Shay, the chairman of Signature Bank. He said he also worried that the conditions on the aid could hurt the way he paid bankers and sales representatives.

    Iberiabank executives said that tougher rules, including limiting dividends, made taking the aid untenable. “It really changed significantly from how it started,” said John R. Davis, a senior vice president at the bank. “All those changes made it very difficult for a bank like us to participate in the program.”


    [excerpt]
    The announcements from the four banks indicate that all three major regulators — the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Insurance Deposit Corporation — are open to granting waivers.

    Only banks deemed “well-capitalized” are expected to receive waivers. Regulators are still scrutinizing the balance sheets of the biggest banks as part of a comprehensive stress test to determine whether they need more capital. Regulators are unlikely to make such decisions until the test is complete.

    Also unclear is the timetable for the country’s biggest banks to return TARP money. Top executives at Goldman Sachs, JPMorgan Chase, Wells Fargo and Bank of America have publicly said that they intend to repay it quickly.

    President Obama did not provide specifics about the conditions that would allow banks to repay the loans quickly. At a meeting at the White House on Friday, at least two chief executives, Lloyd C. Blankfein of Goldman Sachs and Kenneth I. Chenault of American Express, asked the president to provide detailed guidance for returning the TARP money quickly.

    Mr. Obama acknowledged that quick repayment could be a positive signal to the markets but expressed concern about undermining the administration’s efforts to bolster lending.



    http://www.nytimes.com/2009/04/01/business/01bank.html?_r=1&fta=y


    Guess a little more time will tell whether the big guys will return the TARP funds or not.
     
  3. Toro
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    Toro Diamond Member

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    It is not a matter of wanting to control the banks so much as it is a matter of ensuring the banks have enough capital to get through the crisis.

    I have heard of banks trying to give TARP money back but not being able to get ahold of anyone at Treasury.
     
  4. Annie
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    Annie Diamond Member

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    Being threatened with audits is not coercion? That was under Bush. Now it's getting worse.
     
  5. Xenophon
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    Xenophon Gone and forgotten

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    This just doesn't seem right.
     
  6. RetiredGySgt
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    RetiredGySgt Platinum Member

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    Jillian and her left wing koolaid drinking friends will be along to explain how your all just wing nuts and haven't a clue.
     
  7. Burp
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    Burp Always carry, never tell

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    I bet she/they won't.

    There have been several threads that pointed out major flaws and problems with Obama.
    No Obamatron ever posted to them.
     
  8. MaggieMae
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    MaggieMae Reality bits

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    You're first sentence is correct; not so sure about the second. The larger financial institutions like Citibank and BofA are still on shakey ground, and until their own houses are stabilized, it doesn't make sense for similar "banks" to start returning the money when in a few months they could be back for more.
     
  9. MaggieMae
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    MaggieMae Reality bits

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    When did anyone in Bush's adminisration ever "audit" anything?
     
  10. Annie
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    Annie Diamond Member

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    Well except if they never wanted or needed those monies.
     

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