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Banks TOOK taxpayer money??

flacaltenn

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It's a constant drone from the lefties on the board. "The big banks TOOK taxpayer money to bail them out".. Usually posted as a justification for taxing "fat-cat bankers"..

The truth is more interesting. The TARP money was actually FORCED into many banks under threats that the regulators would later REQUIRE them to sign up for the deal. The government was ACTIVELY seeking an equity stake in the banks that would allow them to dictate policies on lending and executive pay..

Paulson Forced Banks To Accept US ‘Buy In’ | Sweetness & Light

OCTOBER 15, 2008

WASHINGTON — On one side of the table sat Treasury Secretary Henry Paulson, flanked by Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair.

On the other side sat the nation’s top bank executives, who had flown in from around the country, lined up in alphabetical order by bank, with Bank of America Corp. at one end of the table and Wells Fargo & Co. at another.

It was Monday afternoon at 3 p.m. at the Treasury headquarters. Messrs. Paulson and Bernanke had called one of the most important gatherings of bankers in American history. For an hour, the nine executives drank coffee and water and listened to the two men paint a dire portrait of the U.S. economy and the unfolding financial crisis. As the meeting neared a close, each banker was handed a term sheet detailing how the government would take stakes valued at a combined $125 billion in their banks, and impose new restrictions on executive pay and dividend policies.

The participants, among the nation’s best deal makers, were in a peculiar position. They weren’t allowed to negotiate. Mr. Paulson requested that each of them sign. It was for their own good and the good of the country, he said, according to a person in the room.

They kept coming back to the same question: Is the plan too sweeping? Policy makers knew they were taking unprecedented steps. It would take years to disentangle banks from the federal government. Some of these temporary steps would be hard to undo.

Mr. Bernanke said the situation was the worst the country had endured since the Great Depression. He said action was for the collective good, an understated appeal. The room was silent as he described the economy’s fragile condition.

Mr. Geithner, whose job as New York Fed chief makes him the central bank’s main man on Wall Street, delivered the most sobering news. He described how much preferred stock the government was going to buy from each firm. The government would take $25 billion in Citigroup, $10 billion in Goldman Sachs Group Inc., and so on.

The CEOs shot off questions, peppering officials for details about how the share purchases would be structured and how it might constrain them. At one tense moment, Mr. Bernanke jumped in to calm nerves. The meeting didn’t need to be confrontational, he said, describing paralysis in the market and the threat that posed to everyone in the room.

U.S. officials argued the plan represented a good deal for the banks: The government would be buying preferred shares, and thus wouldn’t dilute their common shareholders. And the banks would pay a relatively modest 5% in annual dividend payments.

The meeting ended at about 4 p.m. By 6:30 p.m., all of the sheets had been turned in and signed by the CEOs. No second meeting was held.

New details of that meeting show that Geitner et al TOLD the CEOs that the regulators would later REQUIRE them to procure TARP funds in exchange for stock anyway. And that the regulators would prefer to issue "clean bills of health" to the banks that decided to participate.

Yeah -- those fat cat bankers were FRANTIC to be micromanaged by the Feds. Begged for a Bailout? --- Conclusively no...

Banks forced to take bailout money they don’t want or need | Scholars and Rogues

I was told that the regulators supposedly asked the bank to participate, but the bank wasn’t given a choice to participate or not – the funds (equal to approximately 3% of the bank’s total assets) just “showed up” one day. According to the American Banking Association (via the Wall Street Journal Deal Journal blog), my source’s bank was hardly the only one. According to the WSJ, ABA president Edward Yingling wrote to Treasury Secretary Henry Paulson

[M]any banks have been contacted by regulators, and urged, sometimes forcefully, to participate in the [Capital Purchase Program] (emphasis original).

And the International Herald Tribune ran an article on healthy banks who were being pressured to take bailout money that they didn’t want for fear of being stigmatized.


If we assume for just a moment that the $250 billion used for the Capital Purchase Program is going to all of the banks in the U.S., than a huge amount of money is being forced on businesses who don’t want it. According to the ABA letter mentioned above, 95% of all banks were sufficiently capitalized and didn’t need the extra cash. If we even assume that only 50% would have said “no” had they not been pressured, that’s almost 120 billion that didn’t need to be spent.

And what happened when the Banks realized how pesky this govt buyin was to operations and WANTED to pay back the investment???

Barack Obama Maintains Control Over Banks By Refusing to Accept Repayment of TARP Money - WSJ.com

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.

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.

THe admin WANTS power and control over the banks on one hand. And also be free to villify them and make them a scapegoat on the other.

Don't let this meme survive that the Banks BEGGED for a bailout or even NEEDED a bailout. And that ALL banks fell into financial disrepair because of "de-regulation". Point those lefties to the facts about the TARP money that went to banks and how their arms were twisted to take it.
 

sparky

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Tarp was all for show, a mere drop in the bailout bucket Flatdude...........~S~
 
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flacaltenn

flacaltenn

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Sparky:

You need to a grip on the rheostat there. $700Bill is "a mere drop in bailout bucket"??
Do you know how many bad sci fi movies could be made for that?

I just don't want to hear that lefty phrase again about bankers ASKED for the bailout..
 

uscitizen

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Many finiancial instututions rapidly converted to banks to get in on the money.
Not sure how that happens, but they seemed eager to enter regulated status for some reason.
 

uscitizen

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I guess that conversion to being a bank is sort of like being saved by the grace of Gold?
 

American Horse

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Many finiancial instututions rapidly converted to banks to get in on the money.
Not sure how that happens, but they seemed eager to enter regulated status for some reason.

"Losers"'would; but many strong banks were forced so that the losers would be seen to be in good company thus not be seen as the losers they actually were at the time. Now though the gubmt may prefer the sway they hold.
 
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uscitizen

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Many finiancial instututions rapidly converted to banks to get in on the money.
Not sure how that happens, but they seemed eager to enter regulated status for some reason.

"Losers"'would; but many strong banks were forced so that the losers would be seen to be in good company thus not be seen as the losers the actually were at the time.

I am sorry but I seem to need a bit of help understanding what that means.
 
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flacaltenn

flacaltenn

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Many finiancial instututions rapidly converted to banks to get in on the money.
Not sure how that happens, but they seemed eager to enter regulated status for some reason.

Many?? I don't think so.. Geitner et al had the nine biggest in that room and only ONE probably would have signed without being strong-armed.

Once the bankers figured out the strings attached, they tried to throw that money back thru the Treasury windows as quick as possible --- And guess who didnt' want the cash returned?

If you can back up "many" -- let me know..

AmericanHorse is right --- Bernanke/Geitner needed to show a consensus so they diluted the weak WITH the strong. Also --- some go beyond that and theorize that these former "bankers" (geitner/bernanke) were diluting risk because they WANTED the high interest returns from the TARP money. Kinda like putting together the bad debt with good debt and calling it a "mortgage backed security"..
 

uscitizen

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Why is Everyone Becoming a Bank Holding Company? It’s All About the Benjamins
by Kristin Jones
ProPublica, Nov. 12, 2008, 6:05 p.m.

AMEX is the latest company to go into bank-holding for bailout bucks
This morning, Treasury Secretary Henry Paulson announced that the bailout may be expanded [1] to include credit card companies and auto and student loan companies. But American Express isn’t taking any chances. On Monday, AmEx became the latest business to turn itself into a bank holding company, thus making it eligible for the TARP [2] and other emergency loan programs recently set up by the Federal Reserve.

“It makes absolute sense in the current economic environment to be in a position to be able to take advantage of the government-sponsored programs and be on equal footing with others in the industry,” AmEx spokeswoman Joanna Lambert told us after Paulson’s announcement this morning. “It’s what we believe to be the right thing to do.”

Becoming a bank means that AmEx must jump through extra regulatory hoops in exchange for further protection, which also includes federal deposit insurance, access to the Fed discount window [3] and an array of new Fed lending facilities [4] for banks. While the company has said that it will not change its core business strategy, it may bulk up its small banking operations, said Red Gillen, senior analyst for Celent, a financial research group. It is betting that the payout in the short term will be worth the cost.

“Right now they’re really in survival mode,” said Gillen.

The company is following in the footsteps of Morgan Stanley and Goldman Sachs, the investment banks that turned themselves into bank holding companies with the Fed’s blessing in September.

Why is Everyone Becoming a Bank Holding Company? It
 

American Horse

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Many finiancial instututions rapidly converted to banks to get in on the money.
Not sure how that happens, but they seemed eager to enter regulated status for some reason.

"Losers"'would; but many strong banks were forced so that the losers would be seen to be in good company thus not be seen as the losers the actually were at the time.

I am sorry but I seem to need a bit of help understanding what that means.

Weak banks (financial institutions of whatever type) would take money to keep rolling a while longer while they covered their asses. But strong banks were forced to take money so the weak ones would not be stigmatized from having had to take the money which they desperately needed. If everyone was forced to take money then there would be no stigma in taking it.
 
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flacaltenn

flacaltenn

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Why is Everyone Becoming a Bank Holding Company? It’s All About the Benjamins
by Kristin Jones
ProPublica, Nov. 12, 2008, 6:05 p.m.

AMEX is the latest company to go into bank-holding for bailout bucks
This morning, Treasury Secretary Henry Paulson announced that the bailout may be expanded [1] to include credit card companies and auto and student loan companies. But American Express isn’t taking any chances. On Monday, AmEx became the latest business to turn itself into a bank holding company, thus making it eligible for the TARP [2] and other emergency loan programs recently set up by the Federal Reserve.

“It makes absolute sense in the current economic environment to be in a position to be able to take advantage of the government-sponsored programs and be on equal footing with others in the industry,” AmEx spokeswoman Joanna Lambert told us after Paulson’s announcement this morning. “It’s what we believe to be the right thing to do.”

Becoming a bank means that AmEx must jump through extra regulatory hoops in exchange for further protection, which also includes federal deposit insurance, access to the Fed discount window [3] and an array of new Fed lending facilities [4] for banks. While the company has said that it will not change its core business strategy, it may bulk up its small banking operations, said Red Gillen, senior analyst for Celent, a financial research group. It is betting that the payout in the short term will be worth the cost.

“Right now they’re really in survival mode,” said Gillen.

The company is following in the footsteps of Morgan Stanley and Goldman Sachs, the investment banks that turned themselves into bank holding companies with the Fed’s blessing in September.

Why is Everyone Becoming a Bank Holding Company? It

Yeah BUt -- Here's the details... Seems like there was NO RISK to Amex to take the cash because your ProPubicHair link says:

It’s unclear how strictly these banking regulations will be enforced over the short term. Since the financial crisis began, the Fed has temporarily relaxed certain capital requirements [5] for bank holding companies and eased regulation restricting the kinds of transactions they can make with their affiliates.
The Fed has said that the companies have two years to comply [6] with the stricter regulations on bank holding companies, and it will allow extensions of a year at a time.
And some of the companies may hope that the federal regulations will apply to only the commercial banking operations of their company, and not the rest, said Baker.

Not only that -- but Amex was one of 1st to toss the cash BACK to the treasury.. Article dated June 2009 (for crying out loud)..

TARP Repayment: Treasury Says 10 Banks Get To Payback $68B

All eight banks that took TARP money and last month passed government "stress tests" confirmed that they received permission to repay the bailout funds. They are: JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp. and BB&T Corp.

Who wouldn't jump on short term money with no strings attached in order to hedge against further market erosion if they KNEW they'd never be the subject of enforcement and planned to pay it back before Feds could sink their fangs into them.. ESPECIALLY if they knew the regulators would wave them thru the stress test by taking some...
 
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Dr Grump

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Sparky:

You need to a grip on the rheostat there. $700Bill is "a mere drop in bailout bucket"??
Do you know how many bad sci fi movies could be made for that?

I just don't want to hear that lefty phrase again about bankers ASKED for the bailout..

I've never heard anybody say the banks asked for a bail out, but some definitely did, and some definitely didn't.

That aside, why address lefties about it - it was a Bush initiative...Didn't know he was a leftie...
 
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flacaltenn

flacaltenn

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Sparky:

You need to a grip on the rheostat there. $700Bill is "a mere drop in bailout bucket"??
Do you know how many bad sci fi movies could be made for that?

I just don't want to hear that lefty phrase again about bankers ASKED for the bailout..

I've never heard anybody say the banks asked for a bail out, but some definitely did, and some definitely didn't.

That aside, why address lefties about it - it was a Bush initiative...Didn't know he was a leftie...

I just TRIED to search the forum you.. But the search tool is frustrating for locating exact posts and quotes. I'll keep a list for you tho.. It's in most every class warfare thread on the boards. How the "fat cat" bankers get their bailout and "mainstreet" gets the shaft. Making it seem as tho Fed money is INSTANTLY available for the "Wall Street bankers" whenever they ask.
 

uscitizen

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Why is Everyone Becoming a Bank Holding Company? It’s All About the Benjamins
by Kristin Jones
ProPublica, Nov. 12, 2008, 6:05 p.m.

AMEX is the latest company to go into bank-holding for bailout bucks
This morning, Treasury Secretary Henry Paulson announced that the bailout may be expanded [1] to include credit card companies and auto and student loan companies. But American Express isn’t taking any chances. On Monday, AmEx became the latest business to turn itself into a bank holding company, thus making it eligible for the TARP [2] and other emergency loan programs recently set up by the Federal Reserve.

“It makes absolute sense in the current economic environment to be in a position to be able to take advantage of the government-sponsored programs and be on equal footing with others in the industry,” AmEx spokeswoman Joanna Lambert told us after Paulson’s announcement this morning. “It’s what we believe to be the right thing to do.”

Becoming a bank means that AmEx must jump through extra regulatory hoops in exchange for further protection, which also includes federal deposit insurance, access to the Fed discount window [3] and an array of new Fed lending facilities [4] for banks. While the company has said that it will not change its core business strategy, it may bulk up its small banking operations, said Red Gillen, senior analyst for Celent, a financial research group. It is betting that the payout in the short term will be worth the cost.

“Right now they’re really in survival mode,” said Gillen.

The company is following in the footsteps of Morgan Stanley and Goldman Sachs, the investment banks that turned themselves into bank holding companies with the Fed’s blessing in September.

Why is Everyone Becoming a Bank Holding Company? It

Yeah BUt -- Here's the details... Seems like there was NO RISK to Amex to take the cash because your ProPubicHair link says:

It’s unclear how strictly these banking regulations will be enforced over the short term. Since the financial crisis began, the Fed has temporarily relaxed certain capital requirements [5] for bank holding companies and eased regulation restricting the kinds of transactions they can make with their affiliates.
The Fed has said that the companies have two years to comply [6] with the stricter regulations on bank holding companies, and it will allow extensions of a year at a time.
And some of the companies may hope that the federal regulations will apply to only the commercial banking operations of their company, and not the rest, said Baker.

Not only that -- but Amex was one of 1st to toss the cash BACK to the treasury.. Article dated June 2009 (for crying out loud)..

TARP Repayment: Treasury Says 10 Banks Get To Payback $68B

All eight banks that took TARP money and last month passed government "stress tests" confirmed that they received permission to repay the bailout funds. They are: JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp. and BB&T Corp.

Who wouldn't jump on short term money with no strings attached in order to hedge against further market erosion if they KNEW they'd never be the subject of enforcement and planned to pay it back before Feds could sink their fangs into them.. ESPECIALLY if they knew the regulators would wave them thru the stress test by taking some...

Yep they know who runs the government.
Notice the date on my post?
Think about it a bit, this was all set up well ahead of Obama.
 

uscitizen

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btw the gummit is welcome to loan me a few billion at near or zero interest, I will gladly pay them back in 6 months.
 

MeBelle

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Yep they know who runs the government.
Notice the date on my post?
Think about it a bit, this was all set up well ahead of Obama.

Not a Rep controlled Congress, which Obama WAS a part of, BTW.


Have a great Labor Day!
And please don't take my sincere wish the wrong way.

Thanks,
MeBe
 
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flacaltenn

flacaltenn

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USCitizen:

Yep they know who runs the government.
Notice the date on my post?
Think about it a bit, this was all set up well ahead of Obama.

November 2008?? You saying they thought the Obama Admin was gonna be MORE lenient on enforcing regs than the Bush Admin was --- and THAT created a run for the money?

Of course the Bush admin set up TARP -- but nobody figured out to USE it until Geitner/Bernake cornered the big banks and TOLD them to take the money.. The whole concept of TARP was changing weekly..
 
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flacaltenn

flacaltenn

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I've never heard anybody say the banks asked for a bail out, but some definitely did, and some definitely didn't.

That aside, why address lefties about it - it was a Bush initiative...Didn't know he was a leftie...

While I'm collecting that list of USMB quotes for ya -- here's some from the fearless leader himself..

Obama urges 'fat cat bankers' to help - The Globe and Mail

They took billions in bailout cash. Now it's time for the “fat cat bankers of Wall Street” to give something back.

By using unusually inflammatory language, Mr. Obama is signalling that he's willing to continue using the bully pulpit to prod and cajole banks to better serve Americans – even after they're off the government dole. In essence, they owe a debt to all Americans, Mr. Obama said.


“America's banks received extraordinary assistance from American taxpayers to rebuild their industry and, now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy,” he said after meeting yesterday at the White House with the 12 chief executives of the largest banks in the United States.

“The way I see it, having recovered with the help of the American government and the American taxpayer, our banks now have a greater obligation to the goal of a wider recovery, a more stable system and more broadly shared prosperity,” he said.

Or the more entertaining ::

Obama: Time for banks to boost lending - Business - US business - msnbc.com

The meeting came amid Obama's fierce criticism of Wall Street. In an interview that aired on Sunday, Obama rebuked executive paychecks at firms that only last year required tax dollars to keep their doors open.

"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama told CBS's "60 Minutes."
Bankers brushed off Obama's harsh rhetoric.

No he ran for President exactly to HOBBLE those fat cat bankers on Wall Street. And strong-arming banks into taking those funds makes it look like they were eating right out of his hand..

BTW: this isn't about Bush. It's about the lefty perception that Bankers NEEDED and curried favor to recieve those funds..
 
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flacaltenn

flacaltenn

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btw the gummit is welcome to loan me a few billion at near or zero interest, I will gladly pay them back in 6 months.

Wanna share what you'd invest those few billions in for 6 months -- besides Bolivian Catnip or Greek Treasuries?
:lol:
 

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