Smarty_Pants

The Banker: Not a Clue

"it was a wad of money, under the control/discretion of POLS, with no controls, no measurement on effect, passed by legislators without due diligence. has this ever happened before? why are we surprised? where was all the clamor/uproar/public concern at the "point of sale"? did anyone care then?" - fran

As I recall the original go-round resulted in the TARP being defeated in the House as a result of an avalanche of constituent feedback that one House member described as "50% No, and 50% Hell No".

As we all remember, this resulted in the failure to pass the House for the initial TARP. The Senate then pulled a fast one and doctored an unrelated financing bill, replacing all the original language with the TARP language and adding in the $150 billion of extra pork to buy votes in the House. (The Senate had to do that as funding bills must orginate in the House and the TARP had failed there, so an unrelated funding bill was "cut 'n pasted with TARP II to skirt the rules.)

Naturally, TARP II passed the House.

One could argue that TARP I would have passed the house if not for the vociferous response from the public and the fact that elections were only weeks away. If not, it wouldn't be surprising to most if TARP I had passed despite the public's reactions.

fran is right and wrong. The public 'let' these things happen, but not without trying to stop it at the point of attack. The system has become so broken that the 'will of the people' is merely a platitude used to secure re-election. After that, it becomes a vote for sale circus with the high bidder getting legislative support at the expense of the taxpayer.

The Banker: Not a Clue

They say the last gasp of a dying empire is to loot the treasury.

One could argue that the TARP was a defacto looting of the treasury. Could the reason for such secrecy surrounding all the TARPing by everyone involved be to disguise and deny the possibility that they are, in fact, simply looting the treasury when they saw an opportunity to do so?

Could this imply the end of the American empire is close at hand?

Trillion dollar deficits on top of trillion dollar debt can't continue forever. Eventually something has to give and we will see what happens when the debt based house of cards falls in on itself.


"The important thing that taxpayers should understand is that it is a capital infusion treated like preferred stock with a 5% dividend to the government with the requirement to pay it back within 5 years or pay substantially larger interest and fees." - dergman98

That's what they keep saying, but what happens if they CAN'T pay it back within those 5 years? Will piling on additional fees or penalties make it more likely that TARP money will be recovered? If not, what then? Do we simply tack another couple trillion onto the national debt and go have a beer?

I, for one, do not assume that statements claiming the money will be paid back with interest are equivalent to actually paying the money back with interest. It would seem prudent to consider the ramifications of the money not being paid back as well. What if the banks are still insolvent 5 years from now, for whatever reason?

After all, just days before Freddie and Fannie were nationalized the gub'mint officials responsible for monitoring them were claiming that they were in fine fiscal shape.

Preview of the Bank Buy-In

"Not all of the banks involved are happy with the move, but agreed under pressure from the government."

Yep. The Land of the Free, where you are free to do what the government tells you to do, or else.

We have sold our birthright for a mess of potage.

Risk Isn't Just About Volatility

Mr. Shaw makes an excellent point and one that should be remembered, but which the big Wall Street banks seem to have overlooked of late.

Return OF capital before return ON capital.