flacaltenn
Diamond Member
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
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
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
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.
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 nations 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 nations best deal makers, were in a peculiar position. They werent 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 economys fragile condition.
Mr. Geithner, whose job as New York Fed chief makes him the central banks 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 didnt 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 wouldnt 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 wasnt given a choice to participate or not the funds (equal to approximately 3% of the banks total assets) just showed up one day. According to the American Banking Association (via the Wall Street Journal Deal Journal blog), my sources 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 didnt 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 dont want it. According to the ABA letter mentioned above, 95% of all banks were sufficiently capitalized and didnt need the extra cash. If we even assume that only 50% would have said no had they not been pressured, thats almost 120 billion that didnt 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.