Patterico's Pontifications

12/14/2009

Hiltzik: Hey, Let’s Prevent Banks from Repaying TARP Money

Filed under: Dog Trainer — Patterico @ 10:20 pm

Michael Hiltzik:

Among the questions being aired: Has the Troubled Asset Relief Program worked? Have the taxpayers made a profit on the deal? Did we force loan terms upon those banks on the brink of extinction last year that were too steep, or not steep enough?

One question that perhaps isn’t being raised enough is this one: Should we let the banks repay the money?

To put it another way, by allowing the banks to exit the emergency program that saved their butts in the fall of 2008, is the government giving up what could have been an effective tool of leverage over this misbehaving industry?

That’s the way. Force loans on banks that don’t need them as a way of exerting governmental control. It’s already been happening; rewind to this April WSJ piece to see how:

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.

That’s creeping socialism talking, is what that is.

Thanks to my favorite reader.

96 Responses to “Hiltzik: Hey, Let’s Prevent Banks from Repaying TARP Money”

  1. “That’s creeping socialism talking, is what that is.”

    Sounds more like fascism to me, bunch of statist pigs.

    daleyrocks (718861)

  2. when you start demonizing bankers as pampered obstructionist wreckers I think what’s happening is your little country is beginning to know the seductive satisfactions of fascism really. It’s just so much better when everybody rows together, no?

    happyfeet (2c63dd)

  3. whoa.

    happyfeet (2c63dd)

  4. Barack Hussein Omnicaptus Obama to the rescue!

    John Hitchcock (3fd153)

  5. Loan sharks hate it when you actually pay them back, don’t they?

    Steve B (5eacf6)

  6. This needs a little more research. This sounds lke the kind of superficial factoid FOX and the right love to run with cause they know hardly any of their crowd is going to research it. I’m sure Limbo has been ginning up his little dittoheads with this dubious anecdote.

    Daleyrocks, you talk tough about fascism,knowing that no one is going to grind a boot into your little face.

    Jakealoper (37754c)

  7. The Bush administration had a different reason for forcing all the banks to take money. What they feared is that if some banks did and some did not, the public would decide that the ones who did were in trouble, and start runs on them.

    And considering the public mentality at the time, that was probably a fair concern. But it no longer applies.

    Steven Den Beste (99cfa1)

  8. Was that another drive-by misfire I just saw?

    John Hitchcock (3fd153)

  9. “Daleyrocks, you talk tough about fascism,knowing that no one is going to grind a boot into your little face.”

    Jakeloper – Does that actually mean something?

    Research that story to your heart’s content friend. There have been numerous banks stymied from paying back their TARP funds. GOOGLE it! It keeps the jackbooted foot of the Obama Administration firmly on their throats.

    daleyrocks (718861)

  10. Hello; CNN?

    Uh yeah this is big wig of big azz bank; We owe the USA a billion dollars today and have a check in hand to pay it back, they won’t accept it.

    Maybe you can talk to your anointed one and find out why?

    Rinse and repeat as necessary for desired effect.

    ********

    Alternate strategy;

    Send all loan holders cleared paid in full notices of their loans. Close doors in the middle of the night.

    Leaving terse note on the front door for the prez.

    Move across the street with a new name and new govt backed loan and start all over again.

    (I might be a tad testy tonight), get over it.

    TC (0b9ca4)

  11. (I might be a tad testy tonight)

    To ease your testiness, and in the spirit of the season (which makes this OT), try this on for size:

    Lights Of The Season, Part IV ;)

    John Hitchcock (3fd153)

  12. Thanks John,

    Both the thought and the show were enjoyable.

    I return the same thoughts and feelings toward you and yours for a wonderful holiday season as well.

    TC (0b9ca4)

  13. That’s the wrong way to look at it. The Banks were given TARP money with some purpose that they’d use it to lend. If now they’re paying it back to avoid pay restrictions, that’s not really going to that purpose. But if they’re not going to lend, and are just going to act like banks…. Maybe we should just take it back.

    imdw (490521)

  14. Comment by imdw — 12/15/2009 @ 5:01 am

    They were given TARP money in order to not go insolvent – too big to fail, remember? Now the expectation is that they make more of the bad loans that got them under the thumb in the first place. It’s smart that they are paying it back, especially since the government took tiny positions in the companies (if at all), but want to dictate as if they were majority owners.

    Your last sentence? The government doesn’t want to take it back – they like the power it gives them. Why else does Obama complain that banks who have repaid TARP should still obey his bonus restrictions?

    And why is this a scandal, when the DC government is paying bonuses even when they’re in the red and firing folks?

    In any case, all this light doesn’t have much heat – they’re only doing it to rile up folks like you and keep the attention away from where it really belongs.

    Jeff Weimer (952d52)

  15. the problem with this approach is this. okay, what is the logic of using spending clause power to control a company. easy: “hey, they didn’t HAVE to take the money.”

    So if you change the relationship from a voluntary one to an involuntary one, guess what? the logic of granting control disappears.

    A.W. (e7d72e)

  16. “In any case, all this light doesn’t have much heat – they’re only doing it to rile up folks like you and keep the attention away from where it really belongs.”

    It is really amusing to find all the people that have been led by wingnuts to believe that Obama is some sort of marxist spawn of lenin’s vanguard waking to the fact that was apparent a long time ago. Obama is your standard centrist democrat, of the slightly more accomodationist wing of the business party. Did you not pay attention to who advised obama? Who went into his cabinet? This is the guy that nominated senator Greg for commerce, after all.

    imdw (e96d77)

  17. “So if you change the relationship from a voluntary one to an involuntary one, guess what? the logic of granting control disappears.”

    If you want to regulate banks, regulate banks. No need to give them tons of taxpayer money while you’re at it.

    imdw (e96d77)

  18. Obama is your standard centrist democrat

    So, your standard centrist democrat desires to nationalize all the banks?

    You really are as dumb as the other commentors here say you are.

    Some chump (7d157e)

  19. “So, your standard centrist democrat desires to nationalize all the banks?”

    Like I said — you’re now finding out that the wingnuts have misled you all along. Obama wants to TARP all the banks, like Hank Paulson and Sarah Palin and all the TARPers. Welcome to the center.

    imdw (b37d5e)

  20. The “center” in this meaning is somewhere to the slight right of Franco, and to the Left of Tito.

    Dmac (a964d5)

  21. Whatever pressure was put on the banks, they accepted the money (in some cases, as with Bank of America deciding to go ahead with the ML purchase, to preserve their jobs and paychecks) and in doing so agreed to abide by the terms of the ‘investment’ which (admitting that I haven’t seen the contracts) likely restricted the terms and timing of repaying the cash.

    As much as I didn’t like TARP (for many reasons, the socialistic aspects among them), I also don’t like it when one party to a contract tries to walk away from its obligations. Bank managements need to honor their commitments.

    And as a taxpayer, I don’t like the idea of my money going to bail these guys out and then, when things improve, having them reap all the upside. I want a return on my investment and if that entails not letting the banks abrogate the terms of the deal, I’m happy to wait (again, reluctantly, since I don’t want the taxpayers having equity positions in private companies).

    steve sturm (369bc6)

  22. when the DC government is paying bonuses even when they’re in the red and firing folks?

    It’s pretty simplistic – and shortsighted – to argue that a company (or government agency) having financial difficulty should institute across the board freezes in pay or benefits. Organizations in trouble need to get their act together by eliminating what doesn’t work and what isn’t important and by moving forward with the programs and people who are critical to the success of the organization.

    The federal government is bleeding cash, do you not promote soldiers who deserve promotion? do you not offer retention bonuses to soldiers you want to stick around?

    steve sturm (369bc6)

  23. “The “center” in this meaning is somewhere to the slight right of Franco, and to the Left of Tito.”

    And right on top of giving banks billions of taxpayer dollars, and acting shocked when some regulations come with those. Welcome.

    imdw (e96d77)

  24. Like I said — you’re now finding out that the wingnuts have misled you all along. Obama wants to TARP all the banks, like Hank Paulson and Sarah Palin and all the TARPers. Welcome to the center.

    There’s a difference between sending TARP money to banks and eventually allowing them to pay it back and forcing government control upon banks by not allowing them to pay back what they owe.

    You either can’t or won’t see that, and my money is on “won’t”.

    Some chump (7d157e)

  25. some chump – Why can’t it be can’t and won’t?

    JD (5075fe)

  26. “There’s a difference between sending TARP money to banks and eventually allowing them to pay it back and forcing government control upon banks by not allowing them to pay back what they owe.”

    And the difference between sending banks tons of money and sending them tons of money and wanting some regulations on this is that the latter is part of the slightly more accomodationist wing of the business party. Welcome to who runs the country.

    imdw (0172f3)

  27. And the difference between sending banks tons of money and sending them tons of money and wanting some regulations on this is that the latter is part of the slightly more accomodationist wing of the business party. Welcome to who runs the country.

    I don’t think anyone has problems with regulations coming with the money. The problem is when they won’t let you pay the money back to escape those regulations. Are you for that or against it IMDW? Do you think that if a bank want to repay the money, they should be allowed to repay the money? If not, why not?

    Monkeytoe (e66874)

  28. “Are you for that or against it IMDW? Do you think that if a bank want to repay the money, they should be allowed to repay the money? If not, why not?”

    If banks need regulating, I see no need to do it with sending them tons of money.

    Without being for or against, I’m just saying sending banks money and regulating them is a pretty centrist idea, whether the banks want the deal to go exactly that way or not.

    imdw (017d51)

  29. In other words, imdw, you have no real contribution to the discussion at all.

    SPQR (26be8b)

  30. Monkeytoe – It is a mendoucheous twatwaffle. Always. Sometimes it just feels the need to prove it.

    JD (5075fe)

  31. Imdw does not grasp the difference between regulation through legislation and control through forced ownership.

    This is aggressive stupidity.

    Some chump (7d157e)

  32. Obama’s pattern ought to be clear by now. He’s willing to lend you money in exchange for control over your life and your business. TARP, Stimulus, Cap and Trade, Obamacare, etc. It’s all the same.

    Obama uses taxpayer money to reduce you to slavery. Get it?

    ropelight (5883b5)

  33. But imdw uses that original, timeless insult “wingnuts” so he must be a brilliant thinker. Where DO you come up with these zingers?! Remember folks, you’re being “led”. If only you would see the light and go over to the smart side. Jonathan Chait revealed how “dumb” Lieberman is in TNR for obstructing “health care reform” so don’t fall into that trap.

    SPC Jack Klompus (c1922b)

  34. The Bush administration had a different reason for forcing all the banks to take money. What they feared is that if some banks did and some did not, the public would decide that the ones who did were in trouble, and start runs on them.

    And considering the public mentality at the time, that was probably a fair concern. But it no longer applies.

    If they were really that afraid about bank runs, they should have simply allowed the FDIC to take them over immediately and shut them down. A bank that needs tens of billions just to prevent a run is clearly no longer a solvent institution and is not worth saving anyway.

    I’ve long maintained that if Bush and Congress were going to spend $750 billion of taxpayer money on banks, they should have given that money to the FDIC to shut the TBTFs down and have those banks’ assets sold off to the highest bidder for whatever the market would bear. Unfortunately, short of an honest-to-goodness revolution, there’s really no way to punish the politicians who enabled all this moral hazard to begin with after the dot-com bubble popped.

    Another Chris (2d8013)

  35. I didn’t read the TARP bill–that makes me just like the rest of Congress. Did it contain anything that prevents the banks from paying back the money until the government says so?

    Rochf (ae9c58)

  36. Yes, it did, Rochf. It was the “we won” clause.

    I just drove through your fine town.

    JD (c15e00)

  37. [...] payoff be?; MoveOn to hold counter-protest Patterico’s Pontifications: Grading Obama and Hiltzik: Hey, Let’s Prevent Banks from Repaying TARP Money and CBO confirms ObamaCare is a takeover of the health insurance industry Texas For Palin:Gov. [...]

    Lieberman – One against Many; it is a matter of his principles « VotingFemale Speaks! (725c82)

  38. If the centrist position now is that the government can buy ownership in entire industries by fiat and then control those industries in perpetuity, then the centrist position has become fascism.

    Some chump (7d157e)

  39. With the deflation concern, I don’t mind too much that the government injected a couple trillion into the economy. It could have been a boon to the taxpayers, as the banks paid that money back, inflation not occurring, and that money keeping the budget balanced for quite a while.

    But no one in DC seems to be concerned with the deficit actually going away entirely. So the massive spending in a day of crisis is now simply the baseline for spending, and we’ll have ridiculous inflation.

    I don’t know if Another Chris is right about simply shutting down bad banks. That probably would have been an unbelievable disaster. A lot of the economy is a mental state, after all. But in effect, we have bought all these banks and shut down the concept of independent banking. Not sure how much better this situation is than that one.

    Dustin (44f8cb)

  40. Obama is your standard centrist democrat, of the slightly more accomodationist wing of the business party.

    Those of you who corrected me in my mistaken estimation of this fellow were correct.

    The TARP story was that they decided to choose a big number in hopes that it would stop the run on the banks. It did. They didn’t actually use all that money and the plan all along was to have it repaid when the banks stabilized. That is happening now although the lefties are trying to resist so they can play banker with other people’s money.

    I would suggest that those who are really serious about learning the story read this book. Note who wrote the first review. She points out that TARP short circuited a real resolution when Merrill Lynch sold some of those mortgage backed bonds at 22 cents on the dollar. Had that continued, we might have found a way to value those securities but TARP came along and nobody was going to sell at a big discount when Uncle Sam would pay top dollar.

    They eventually gave up on the basic plan for TARP, to buy the bonds, because they couldn’t agree on what they were worth. The government rescue had prevented the true valuation. To this day, we don’t know what they are worth and the real value is probably less than it would have been if the feds had left them alone.

    This is much the same thing that happened in Japan when their real estate bubble burst. They have never recovered completely and it has been almost 20 years. They also didn’t have dedicated leftists in charge until the blast election, so they made out better than we will. I expect Japan to decline more now with the left in office. The last time this happened in Japan was in the 1920s and they wound up with fascists running the country.

    Mike K (2cf494)

  41. …if Bush and Congress were going to spend $750 billion of taxpayer money on banks, they should have given that money to the FDIC to shut the TBTFs down and have those banks’ assets sold off to the highest bidder…

    This is pretty much lasseiz-faire dogma and my thinking at the time. But we’d have been wrong. The FDIC would have collapsed and a lot of counterparty agreements would have imploded and the collateral damage would have been breathtaking.

    As it worked out, we’re getting all the money back with substantial interest. Yes, the moral hazard remains operative only in spades now. But the alternative was a meltdown of massive proportions.

    So, massive meltdown v. banks afloat and our money back with interest. Who ya got?

    spongeworthy (c2e8fe)

  42. Well Mike, if this crisis were to somehow pass, the economy recover all the way back to January 2006, and the government didn’t gain any power, many democrats and more than a few beltway republicans would be displeased.

    You’re talking about selling things for what they are worth after stopping a run-on-banks disaster. That’s capitalism, and if that was the goal I think we’d see that happen. The goal is more power in the hands of the corrupt, and that’s about it.

    Things are complex enough that most voters eyes glaze over. They want lower unemployment, but aren’t really aware of what’s going on beyond that. They sure as hell aren’t going to learn about it from Katie Couric.

    Dustin (44f8cb)

  43. Spongeworthy – If they were not resisting banks paying back the money, I doubt we would even be having this discussion right now.

    JD (a2cd1c)

  44. That’s creeping socialism talking, is what that is.

    We’re already socialist. This is just haggling over which socialist faction is calling the shots, the banks or the government.

    The banks have their government guarantee that they will not be allowed to fail. They don’t want any strings attached to it, the government does.

    Nobody involved is suggesting that the basic arrangement should be scrapped, because everybody involved is a socialist.

    Subotai (7e3dd5)

  45. I’ve long maintained that if Bush and Congress were going to spend $750 billion of taxpayer money on banks, they should have given that money to the FDIC to shut the TBTFs down

    As spongeworthy notes, we just didn’t have the institutional stuff in place to wind those institutions down w/o causing the economy to completely melt down from counterparty & credit freezes.

    jpe (08c1dd)

  46. “If the centrist position now is that the government can buy ownership in entire industries by fiat and then control those industries in perpetuity, then the centrist position has become fascism.”

    A rather simple way to look at at it is: The pro-business position would be that we give money to banks. The anti business position would be that we regulate banks. And the centrist position would be somewhere in the middle, doing some of both: regulating and giving them money. I know reality is not that simple, but this simple formulation may get you to see what I’m talking about.

    “Imdw does not grasp the difference between regulation through legislation and control through forced ownership.”

    I certainly see a difference. I prefer the former over the latter. Like I said — if we need to be regulating banks, lets do it without giving them money.

    “If they were really that afraid about bank runs, they should have simply allowed the FDIC to take them over immediately and shut them down. A bank that needs tens of billions just to prevent a run is clearly no longer a solvent institution and is not worth saving anyway. ”

    I don’t think these were all FDIC covered institutions and FDIC covered deposits. There’s a proposal to make FDIC-like takeovers available for other financial entities. Wingnuttia is, of course, opposed. Obama is a marxist that wants to take over banks, you see.

    imdw (e6c812)

  47. Letting the banks out from their obligations without a convincing structure for winding them down the next time they fail is just accepting the worst of all systems – private profit, public gain. I see no reason to believe that any of them did not need the money; that just seemed like a convincing way to provide some uncertainty about which were already insolvent.

    MattJ (e51a1d)

  48. Obama is your standard centrist democrat

    Yes, Obama IS your standard centerist Democratic. Which says a lot about where the center of the Democratc party is.

    Subotai (7e3dd5)

  49. Fundamentally mendoucheous, iamadimwit is.

    JD (a2cd1c)

  50. “If the centrist position now is that the government can buy ownership in entire industries by fiat and then control those industries in perpetuity, then the centrist position has become fascism.”

    Or socialism. Same thing when you get down to it.

    The thing is, the banks want a big element of government involvement. That is a characteristic of fascism/socialism.

    Subotai (7e3dd5)

  51. It’s not just Obama that wants control; it is the entire Federal government that wants it. One may argue that this party or that party has been worse or better – but the truth is congress (people) from both parties created this mess.
    The banking meltdown came from too much legislation coupled with lazy oversight. A free market system would not have allowed the vast number of bad loans. The bundling of bad bank loans leading to the derivitives would not have happened. There would not have been a housing price bubble because the source causing the price spike – cheap, unsecured loans – would not have existed in the volume it did.
    The Feds had plenty of warning but were greedy. The bankers were greedy as well. All of us investing in banks and taking loans on the cheap were greed too.
    It’s time to put the onus back on business. Get the @#$%ing government out of the mix. It will be painful; but it is the only way to get the economy on the right track.

    Corwin (ea9428)

  52. “The thing is, the banks want a big element of government involvement. ”

    You’re starting to get what the business party delivers and who they serve.

    imdw (117deb)

  53. Obama is a marxist that wants to take over banks, you see.

    Obama is a Marxist because he wants the government to take over everything, from the banks to healthcare to the auto industry to the emission of carbon-dioxide.

    This is what the Democrats are. Asking why they do these things is like asking why the Terminator tries to kill Sarah Connor.

    Subotai (7e3dd5)

  54. “Wingnuttia is, of course, opposed. Obama is a marxist that wants to take over banks, you see.

    Comment by imdw ”

    Well, call me a wingnut, then. It’s clear these institutions are not free to pay back and take care of themselves and that Obama wants to take over our industries and institutions.

    What’s amazing to me is that Wall Street elected Obama. People are getting very rich off these bailouts. It’s Obama taking over our banks by making sure the right people get very rich in the process.

    “The Feds had plenty of warning but were greedy. The bankers were greedy as well. All of us investing in banks and taking loans on the cheap were greed too.
    It’s time to put the onus back on business. Get the @#$%ing government out of the mix. It will be painful; but it is the only way to get the economy on the right track.

    Comment by Corwin ”

    You’re not going to win many elections talking like that, but I would vote for you. People take risks, win some, lose some, and should take responsibility for it. Instead, Grandma’s Roth IRA is just another government entitlement, or soon will be.

    Without winners and losers, capitalism doesn’t work.

    Dustin (44f8cb)

  55. You’re starting to get what the business party delivers and who they serve.

    Great, now if you could only understand that the “business party” includes the people you serve, you’d be getting somewhere.

    Subotai (7e3dd5)

  56. Subotai gets it. Goldman hires Chelsea. they greatly prefer Obama and send him a wealth of donations. They are almost crushed by their bad decisions, but Obama finds a way to save their asses and now they are set to give out billions in bonuses for 2009.

    They aren’t Republicans. I’m not denying Corwin’s point that the GOP has plenty of douche. We all see douches on the right from time to time. But Obama is spending our kids’ futures to pay off democrats on Wall Street and buy control of banking. These people elected Obama as an investment that they are now reaping rewards from.

    I guess IMDW is saying that the Business Party is all about making money and screwing us over, via corruption. But why use the word business? I own a business. It’s not helped by this at all. I have friends who own businesses. they aren’t screwing anyone over and had nothign to do with this.

    GE and Goldman don’t represent the normal business mindset in this country. Neither does DC. Let’s make that distinction.

    Dustin (44f8cb)

  57. “Great, now if you could only understand that the “business party” includes the people you serve, you’d be getting somewhere.”

    This is what I said:

    “Obama is your standard centrist democrat, of the slightly more accomodationist wing of the business party.”

    Maybe you didn’t catch that.

    imdw (5f60be)

  58. I think you have a point, imdw, but I disagree that this is what business in general wants. I think there are some very powerful and wealthy people who you might associate with business in general, and that these people love corruption whether it comes from Tom Delay or David Axelrod (and have more luck with the democrats).

    Let’s not pretend this is what capitalism or business is about. Business is the victim of your Business Party.

    Dustin (44f8cb)

  59. by the way, imdw, all the rudeness really makes it harder for you to have a meaningful conversation. This place gets a lot of trolls from the left and right, and when you call people wingnut or make up stories about child rape, people just become instantly hostile to you. Is hostility what you came to this blog for?

    Dustin (44f8cb)

  60. Good Allah. Iamadimwit is intent on proving it. Again.

    JD (7ee27c)

  61. I don’t think these were all FDIC covered institutions and FDIC covered deposits.

    The investment firms weren’t, but that’s hardly the point. Given all the banks that the FDIC has shut down in the last year or so, some of them costing the fund billions, it would have made more sense to take over and shut down these doo-doo banks once it was clear that their asset-to-liability ratios were far beyond any reasonable measure. And of course, there’s still the question regarding the politicians that enabled all this to happen to begin with by removing the moral hazard of loaning to people who don’t have the ability to pay back the loan, and encouraging a speculative environment across the entire real estate community.

    Sooner or later, the lesson always re-emerges:

    “One simple idea allows an over-trading folly to turn into a speculative disaster – whether it involves ocean commerce, land in Louisiana, stocks, bonds, tulip bulbs or home mortgages. The idea is that unlimited prosperity can be created by the unlimited expansion of credit.”–PJ O’Rourke

    Another Chris (2d8013)

  62. “One simple idea allows an over-trading folly to turn into a speculative disaster ”

    Yeah, this level of disaster and investor hardship would have been better if you wanted to prevent this from happening again.

    Do you think the democrats don’t want this to happen again, though? Of course not. They want as many crises as they can exploit.

    People look to government to fix a problem. It was up to Bush, and perhaps even Mccain, to hold the line. They didn’t. I’m not surprised the democrats are acting like democrats, though. Bush prevented a disaster, but now we’ve got a more drawn out and worse problem.

    Dustin (44f8cb)

  63. the “business party”

    I realize those quotation marks are for another purpose, but they also pertain to what has occurred in the developed (read peaked out and fading) nations. The business of making profits from producing real things or services on the front and back end of those real things has been gradually replaced by corporations depending more on their YOY profits from creative financing activities. In the case of the banking industry, banks are not loaning, or expanding credit, because it has been much more profitable and risk averse to simply use their cash reserves to purchase Treasurys. This has served to help maintain unnaturally low interest rates while not providing the looser loaning environment to business that was expected to occur. I cringe at calling banking a business. They are profit centers based on nothing more than the spread between costs to them to acquire funds and what is returned to them from loan repayments and fees, plus in the current scheme of things the interest paid on Treasurys. The most ludicrous thing I’ve read this week is Obama barking at the bankers to throw their money down a hole. From what I see around the business world, companies that are solid have tons of cash ready for the next round of M&A. Viable businesses are either still getting funded, or don’t need it because they are hunkering through the recessionary period. What no one is talking about, because it doesn’t see the light of day, is the vast expanse of bad loans and derivatives still hidden off the books, especially in the mid to large regional banks that hold a lot of commercial RE paper alongside the usual mortgage garbage.

    political agnostic (be8994)

  64. Uncertainty is a leading detriment to getting the economy moving forward. Worries about more potential failures, cap and trade, health reform, and government insolvency all contribute to this uncertainty. I don’t see any near future fixes.
    The irony of having a government short of cash while banks are willing and wanting to pay back the loans is amusing.

    Corwin (ea9428)

  65. A rather simple way to look at at it is: The pro-business position would be that we give money to banks. The anti business position would be that we regulate banks. And the centrist position would be somewhere in the middle, doing some of both: regulating and giving them money. I know reality is not that simple, but this simple formulation may get you to see what I’m talking about.

    I take back what I said earlier about you being as dumb as other commenters here have said. In fact, you are much dumber than that.

    There is a difference between regulating and ownership. You seem to think that because Congress didn’t pass a regulation, it’s okay for the government to take ownership of the banks. It’s wrong, it’s mule-headed, and your stubborn insistence that this is just well-deserved regulation tells me that you are not at all interested in intellectual honesty.

    No one who is really pro-business would want the government simply handing money over to banks. But TARP wasn’t created for that purpose, it was created for the purpose of keeping the currency from collapsing. A government has a positive duty to see that its currency doesn’t collapse.

    Some chump (7d157e)

  66. imdw, are you John Mccain?

    Centrism is not doing the worst of both sides. Our banks were overregulated throughout the bush years. Giving a failed business model the taxpayer’s money wasn’t going to help in the long run.

    I think what Another Chris and Corwin are trying to say is that this disaster is going to happen anyway. Avoiding this disaster is an illusion. These banks are still going to fail, only we’re making it a more massive and costly failure that also takes down the economic system.

    Dustin (44f8cb)

  67. As long as the banks are allowed to hide their bad assets, we will endure our “lost decade”.
    Those assets must be dumped into the market at whatever price they will bring.
    If TARP hadn’t short-circuited the process that ML was attempting to accomplish, we would, by all rights,
    be through that pain by now, and a solid recovery would be underway.
    I won’t even talk about the bludgeoning of BofA by Paulson & Bernanke over the purchase of a bankrupt ML,
    bankrupt because they weren’t allowed to wash all of those bad assets in an orderly manner and now they’re all on BofA’s books,
    dragging down the performance of that institution.
    If the TARP money, and the Stimulus money had instead been used to buck-up FDIC,
    the TBTF institutions could have been liquidated in an orderly manner,
    but there would have been no opportunity for the corruption that we know is endemic in TARP/Stimulus,
    and there would have been no honey-pot for the pols to dip into.

    The only way to clean this mess is to deny re-election to ALL incumbents,
    and to replace them with non-career politicians from the business community,
    and (I would emphasize) retired military who are used to finding the least bad choice to implement,
    and then accomplishing their mission.

    AD - RtR/OS! (a0d238)

  68. The mistake was letting banks invest in all these derivatives without somebody monitoring them. Nobody knew what those computer models were doing. It was just like climate change. I linked a couple of months ago to an article in WIred on the modeling program. Here it is.

    Nobody who was using that software understood it and the assumptions that were in it. Just like they don’t understand the modeling that the AGW people are relying on.

    The best approach might have been the Bad Bank concept that Sweden used. That is still controversial but what we did was the worst of all possible worlds.

    Mike K (2cf494)

  69. I think what Another Chris and Corwin are trying to say is that this disaster is going to happen anyway. Avoiding this disaster is an illusion.

    Bingo.

    But TARP wasn’t created for that purpose, it was created for the purpose of keeping the currency from collapsing. A government has a positive duty to see that its currency doesn’t collapse.

    Unfortunately, Bernanke’s debt monetization and “quantitative easing” has pummeled the dollar in relatively inverse proportion to the rate the stock market has gone up.

    I disagree with your contention that TARP was passed to prevent the currency from collapsing; it was promoted by everyone who supported it at the time as a means to get banks lending again because their asset-to-liabilty ratios had grown to grotesque proportions. The argument was that businesses relied on these loans to keep themselves afloat in order to maintain inventories, pay employees, etc., during slow seasons, and TARP would enable the banks to keep the credit hose pumping.

    What no one in the previous and current administrations, or Congress, ever seemed to consider was the idea that the banks, seeing that they were getting pummelled for years of making risky loans (with government encouragement/coercion, no less), decided to take the bailout money, shore up their balance sheets to a degree that they seemed solvent enough at a superficial level (and as AD pointed out, they are still hiding their bad assets off their balance sheets, another TARP feature); and hunker down by not making as many risky loans, barring insurance by the government (as evidenced by the all the defaulting FHA loans). Consumer credit AND bank lending has fallen through the floor because this. The ONLY sector of the economy that is still taking on more debt right now is the government, and they, along with the Fed, have been painting themselves into a corner.

    TARP may have prevented a currency collapse at the time it was passed, but in the long run it just cemented the moral hazard that eventually will blow up in our faces.

    http://www.market-ticker.org/archives/1731-To-Congress-Your-Loan-Has-Been-Called.html

    Another Chris (2d8013)

  70. “There is a difference between regulating and ownership.”

    I know. I said I prefer the former over the latter.

    “No one who is really pro-business would want the government simply handing money over to banks. But TARP wasn’t created for that purpose, it was created for the purpose of keeping the currency from collapsing. A government has a positive duty to see that its currency doesn’t collapse.”

    TARP was created as a bailout. I don’t recall it being about the “currency collapsing.” Though there were different people promoting it for different reasons. To wit, sarah palin:

    “But ultimately what the bailout does is help those who are concerned about the healthcare reform that is needed to help shore up our economy um helping the… oh – its gotta be all about job creation too – shoring up our economy and putting it back on the right track.”

    “The best approach might have been the Bad Bank concept that Sweden used. That is still controversial but what we did was the worst of all possible worlds.”

    Yes I liked the swedish approach.

    imdw (a91996)

  71. the only thing the swedish do right is bikini teams. sigh.

    A.W. (e7d72e)

  72. imdw, you missed part of that Palin quote that makes a lot of sense. Of course, ultimately, these massive spending attempts were meant to exploit a crisis to get lots of legislation while also somehow fixing the economy.

    You may think it’s stupid for Palin to associate the health care with TARP, but she didn’t. She pointing out that the democrats did. And if you recall, Obama repeatedly said that Health Care was related to the basic project TARP was intended to ‘fix’.

    Dustin (44f8cb)

  73. “You may think it’s stupid for Palin to associate the health care with TARP, but she didn’t. She pointing out that the democrats did. And if you recall, Obama repeatedly said that Health Care was related to the basic project TARP was intended to ‘fix’.”

    Please add more palin quotes that you feel are necessary. This is part of her defense of TARP.

    imdw (017d51)

  74. No, I don’t think I will. People can decide if they believe your assertions if you want to quote someone without providing a link to the entire quote. You thought it sounded screwy, because of course, it is screwy to link health care to the bailouts. You lifted that from thinkprogress or some nuthouse like that, and have no idea what you’re talking about.

    Dustin (44f8cb)

  75. “People can decide if they believe your assertions if you want to quote someone without providing a link to the entire quote”

    Put it into google and you’ll find more of the quote and several sites hosting it. It’s from an interview with Couric. You said I’ve missed part of it. Feel free to add what I’ve missed.

    [note: fished from spam filter. --Stashiu]

    imdw (c3c479)

  76. I just read this, and thought it cogent to the discussion of banks desiring to repay their TARP obligations. This excerpt is credited to today’s Daily Reckoning newsletter:

    “…[Eric's Note: Furthermore, even though the folks at Citigroup and the other big banks have been making headlines about repaying their TARP borrowings, the Federal Reserve continues to supply massive "backdoor credit" to these very same institutions. Yes, the banks are repaying TARP loans, but the banks are also continuing to sell their toxic mortgage-backed assets to the Federal Reserve. And you will notice that the pace of MBS buying by the Fed has accelerated, matching almost dollar-for-dollar the funds the banks have been repaying to the TARP and other credit facilities. In other words, the banks are merely repaying the government with one hand while borrowing from the government with the other hand.]

    According to its latest report, the Federal Reserve now owns over $1 trillion of mortgage-backed securities, which is 45.6% of all assets on its balance sheet. One year ago mortgage-backed securities were only 0.6% of the Federal Reserve’s total assets…”

    political agnostic (be8994)

  77. imdw, your comments reveal that you have forgotten or never knew of the recent history of last fall’s financial market crisis.

    SPQR (26be8b)

  78. I mean, IMDW asked me to prove that Glenn Beck hadn’t raped and murdered a child. No, of course I won’t do as asked.

    Dustin (44f8cb)

  79. “I mean, IMDW asked me to prove that Glenn Beck hadn’t raped and murdered a child.”

    Did you read the website about questions surrounding Glenn Beck’s rape and murder of a young girl in 1990? Glenn beck tried to have it shut down, but failed. However the site owner gave it to beck. You’ll have to find the story on your own.

    imdw (4fe3dc)

  80. There is a website! It is true!

    JD (e6cb4c)

  81. Yeah, I know, I wasn’t supposed to respond to it, but it’s germane to the idea of lying about what people say and think. That’s a big part of the attempt to paint TARP as Sarah Palin’s fault, or somehow to vaguely everyone’s fault that we might as well just forget all about it.

    IMDW wasn’t able to resist destroying his credibility. Well, I guess I’m wrong to suggest there was any. Still, it was awesome when Beck shut down the site despite a european court permitting an obvious libel.

    Marc Randazza and Isaac Eiland-Hall lost control of the website, not because a judge said so, but because of the force of shame. Once Isaac’s name was well known to actually joke about child rape/murder fantasies, and accuse political opponents of child rape/murder, Isaac Eiland-Hall was scared. He redacted his name from all legal documents that he boasted and gloated about. He thought it was OK to tarnish someone’s reputation with lies, but for people to know what Isaac Eiland-Hall actually did? No, he didn’t like that very much at all.

    so he apologized to Glenn Beck. He said he was very sorry, and begged Beck not to make his name famous, giving up the website he spent a lot of time and money keeping. Oops.

    IMDW passes his lies, laughing all the way, in an effort to make clear to conservatives, such as Palin or anyone else critical of Obama, that they will attempt to destroy you if you don’t follow their path of massive spending.

    Their speech was not covered by the first amendment. Libel just isn’t covered. Abusing our rights is not good for them, IMDW. Isaac Eiland-Hall learned that the hard way, and now his words will never be respected. He’s a psycho, like you.

    Our financial crisis ruined a lot of lives. People are doing without. Job opportunities are dissappearing. We have to remember that some people are delighted by this opportunity to take control of banks, making their political power more personally lucrative. Oppose them too prominently, and watch imdw make something up about you, too.

    Dustin (44f8cb)

  82. I want people to understand that this power grab from TARP and banks being forced to stay under our rulers’ thumbs is directly related to the attempts to intimidate Fox News.

    There’s a reason the inventor of internet astroturf is the chief political strategist in the white house. His skillset is obviously relevant to Obama’s political strategy.

    Dustin (44f8cb)

  83. A reminder:
    “If it moves, tax it;
    If it keeps moving, regulate it;
    If it stops moving, subsidize it!”

    …a philosophy of democratic-socialism…

    AD - RtR/OS! (7e8f29)

  84. But I saw it on a website! It is true! True I tell you! TRUE!

    JD (8607be)

  85. That link is real. Thus it is true.

    JD (8607be)

  86. “so he apologized to Glenn Beck. He said he was very sorry, and begged Beck not to make his name famous, giving up the website he spent a lot of time and money keeping. Oops.”

    This is how he begged to not make his name famous:

    http://gb1990.net/legal/solution/Dear%20Mr%20Beck.pdf

    imdw (490521)

  87. This is the apology:

    “The purpose of the expressive freedoms embodied in the First Amendment is not to simply permit the greatest possible scope of expression, but also, in so doing, to also strive for excellence in the conveyance of ideas. Rather than choosing to strive for excellence and civic contribution, you simply pander to the fears and insecurities of your audience. And in the process, you do them, and us all, a great deal of harm.

    Shame on you Mr Beck.”

    You think this is an apology?

    imdw (490521)

  88. “But I saw it on a website! It is true! True I tell you! TRUE!”

    Thankfully, the folks at the foreign court that Beck went to recognized the nature of parody, if not the first amendment.

    imdw (274dd6)

  89. Liberal fascism, it’s what’s for dinner!

    daleyrocks (718861)

  90. I love that IMDW posts proof that I’m right.

    If anyone reads IMDW’s pdf, they will see that the author actually redacted his own name.

    That was Beck’s central request in his lawsuit, which in arbitration was granted him. Once he knew Isaac’s name (look this guy up on facebook to see what hate looks like, btw), that guy folded like a lawnchair and apologized. Yeah, he’s gloating now that News Corps has moved on and knows he has no assets to sue for. Big deal.

    When Isaac admits that he made up the accusation of raping a little girl and murdering her, and makes clear he no longer owns the website he paid for, he is explicitly following through on demands. That’s suck, imdw. You read the letter, so why did you push such a horrible libel? Because you don’t want anyone questioning the massive theft of our future’s money through bailouts and ‘relief’ programs. The billionares don’t want anyone to think they can just speak freely without being smeared. What’s hilarious is that imdw’s attempt to chill speech is under the guise of free speech. they think they have a 1st amendment right to libel.

    Dustin (44f8cb)

  91. “If anyone reads IMDW’s pdf, they will see that the author actually redacted his own name.”

    When you opened the PDF, were the first words you read “Dear Mr Beck” or “ISAAC EILAND-HALL” ? When you got to the word “Sincerely” at the bottom, what was hand written right below that? Was it “Isaac Eiland-Hall”? When you got below that, why do you think his address and phone number were redacted?

    Why do you keep up like this? The guy made a parody of beck, which is still up:

    http://gb1990.net/ and

    http://didglennbeckrapeandmurderayounggirlin1990.com/

    Just not at the domain name glenn beck went to a foreign court to try to grab.

    Now, just as you have misunderstood these clear writings, so you may have misunderstood what I wrote. So don’t worry so much.

    imdw (efa369)

  92. I just can’t get my head around this.

    The democrats could score a victory in the press by letting a few banks out of this program and then passing regulation legislation that is sweeping.

    Some have noted that this provides some cover so that there wasn’t a smaller number of banks, highlighted to customers who might run on the banks. but that was then… the well connected got their money, their bonus checks have cleared, and their shareholders or whatever are paying the government back. This seems like such a bad way to keep the powerful on board, except that some might see it as great populism.

    Dustin (44f8cb)

  93. Dustin, maybe you can get your head around this idea:

    If you want the government to control everything and there’s a clause that lets you control the money-brokers so long as they owe you money, are you going to let the money-brokers pay you back?

    John Hitchcock (3fd153)

  94. I guess I should be glad that they don’t think they can get that level of power without some kind of contract.

    If you have to actually make this deal with the devil, that’s a bit better than legislative fiat. I think they are really overplaying their hand.

    Dustin (44f8cb)

  95. Dustin is an amazing character.

    I have several Google alerts set up to try and keep an eye on the spread of the meme. Since my name is quite unique, I have one set up for my name. A couple of times, Dustin’s comments about me have shown up.

    What Dustin doesn’t realize is that I never libeled Glenn Beck, and Beck knows it. He filed a domain dispute with WIPO, which I won. You can not only see the entirety of the legal documents that went back and forth – http://gb1990.net/legal/ — but you can check the WIPO site itself and see that I won the dispute: http://www.wipo.int/amc/en/domains/search/case.jsp?case_id=16357

    So, Dustin: You accuse me of being a child rapist. Do you not realize that *that* is libel? I could pursue getting your IP address and taking you to court. Your words are clearly statements, and clearly libel, and definitely not parody.

    My website *was* clearly parody, and it never made any accusations – only purported to want to “investigate” a “horrible rumour”, which the website clearly said was known (or, at least assumed) to be false.

    My website further explained, from the very first day it was up, that the purpose of the site was to point out that this technique is one used by Beck himself.

    My website was, and remains, protected speech. Your libel is not.

    Anyone can do the research – look for themselves, and see what’s going on here. The only people you fool are the ones who don’t care to use their brain at all.

    Isaac Eiland-Hall (87f0f7)

  96. [...] is such a crazy leftist, he actually suggests that the government should prevent banks from repaying TARP money, so that the government can retain control over the [...]

    Patterico's Pontifications » Patterico’s Los Angeles Dog Trainer Year in Review 2009 (e4ab32)


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