The Letter That Banks Would Love to Send the Government

Banks have received billions of dollars from the government as part of the Capital Purchase Program (CPP) of the Troubled Asset Relief Plan (TARP) set up by the Bush Administration. Here is the letter they would love to send to Congress.

Dear Congress,

Thank you very much for the capital last Fall, but there are some things that we need to explain to you.

Most of us didn't need the capital, but took it because you browbeat us into accepting it, or we were so scared that we felt we had no choice.

Please stop calling it a "bailout." It was not a bailout, because you received something of value in return for your investment. The security you received pays you a healthy dividend, and it came with warrants to purchase our stock. Although most of the warrants are out of the money because of the panic in the market, investing is a long term game, and it is possible that five years from now, you will find that in the aggregate you made a great investmentin the financial system. Also, remember that every single one of us that took capital from you is current on dividend payments.

We understand you are angry because of the losses we are taking currently, but quite honestly, and with all respect, you have run up a $10.8 trillion dollar loss in the country's finances since the late 1700's, and maybe you should take care of that before you criticize us for our considerably smaller losses.

You are a stakeholder in our bank now, but nothing more, so stop telling us not to play golf with our clients, or to stop sending our most productive employees on weekend trips when they make money for our firm. Normally, we don't put up with this much abuse from our preferred shareholders, but we cut you some slack due to your inexperience with capital markets.

Please stop hauling us in front of various Congressional committees to generate sound bites to display to your constituents back home. I would think you have enough of these already, and we have lots of work to do to get through this credit cycle.

Thank you, and please contact investor relations like all other shareholders if you have any further questions.

Sincerely,


Anybank

Comments

[Mad Hedge F...:]

So nationalize the banks already! Get it over with! Call it whatever you want: partial nationalization, temporary nationalization, socialization, liverwurst, or rutabaga. Just get it over with! This tortuous slow drip of on again, off again, stop gap measures is going to cost us more than if we executed the politically incorrect “N” word. Of course, a government takeover is the worst nightmare for many Republicans. But now that former Fed governor Alan Greenspan and many fiscal conservatives are on board, this shouldn’t amount to political suicide for Obama. The FDIC’s Sheila Bair already does this on an almost daily basis with smaller regional banks, like Washington Mutual, but for some reason the top nine “too big to fail” banks are sacrosanct. Their deposits have been effectively nationalized with government guarantees since last fall. The market is already selling us that many of these once hallowed institutions are now worthless. This is what Citigroup (C) at $1 and Bank of America (BAC) at $2 are telling us. Just wipe out the pitifully little the common shareholders have left, clean them up, and resell them in five years after the credit markets are restored. Every government that ever did this, like the UK in the eighties and Hong Kong in 1998, made a fortune. I was involved with both, and serious coin was made by the sellers and the buyers. Not to drive a stake through the hearts of these de facto “zombie” banks really would risk a Great Depression II and an “L” shaped lost decade. The markets would love decisive and surgical action like this and rocket.

Feb 26 07:08 AM

[Loanboss1:]

funny... last night on the news there was a piece on Congressional spouses travelling on air force jets that cost 1 million a week to operate on our dime. I pray that there I backlash for all the self righteous polititians that jeered and poked at our CEOs in a time of need


On Feb 26 07:08 AM The Mad Hedge Fund Trader wrote:

> So nationalize the banks already! Get it over with! Call it whatever
> you want: partial nationalization, temporary nationalization, socialization,
> liverwurst, or rutabaga. Just get it over with! This tortuous slow
> drip of on again, off again, stop gap measures is going to cost us
> more than if we executed the politically incorrect “N” word. Of course,
> a government takeover is the worst nightmare for many Republicans.
> But now that former Fed governor Alan Greenspan and many fiscal conservatives
> are on board, this shouldn’t amount to political suicide for Obama.
> The FDIC’s Sheila Bair already does this on an almost daily basis
> with smaller regional banks, like Washington Mutual, but for some
> reason the top nine “too big to fail” banks are sacrosanct. Their
> deposits have been effectively nationalized with government guarantees
> since last fall. The market is already selling us that many of these
> once hallowed institutions are now worthless. This is what Citigroup
> (seekingalpha.com/symbo...) at $1 and Bank of America (seekingalpha.com/symbo...)
> at $2 are telling us. Just wipe out the pitifully little the common
> shareholders have left, clean them up, and resell them in five years
> after the credit markets are restored. Every government that ever
> did this, like the UK in the eighties and Hong Kong in 1998, made
> a fortune. I was involved with both, and serious coin was made by
> the sellers and the buyers. Not to drive a stake through the hearts
> of these de facto “zombie” banks really would risk a Great Depression
> II and an “L” shaped lost decade. The markets would love decisive
> and surgical action like this and rocket.

Feb 26 08:45 AM

[Eric Fox:]

"The market is already selling us that many of these once hallowed institutions are now worthless. "

It has been my experience that markets are irrational and usually wrong.

Feb 26 09:53 AM

[jack kreg:]

excellent, I would only add;
"a $10.8 trillion dollar loss in the country's finances since the late 1700's",

AND the unfunded obligation to pay out SS and MCare retirement benefits over the coming decades of $60T and growing!!

nice letter, send it to Obama!!

Feb 26 11:57 AM