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Economy
US to put conditions on Tarp repayment
2009-04-20
Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times. “Our general objective is going to be what is good for the system,” the senior official said. “We want the system to have enough capital.”
This isn't about the 'good of the system'. Banks that repay the TARP money are no longer controlled by the Bambi administration. That won't do.
His comments come as Goldman Sachs, JPMorgan Chase and other relatively strong banks are pressing to be allowed to repay their bail-out funds. On Sunday, Lawrence Summers, President Barack ObamaÂ’s top economic adviser, told NBCÂ’s Meet the Press that repayments could eventually help the government provide further resources to help the sector. Such a move could also allow healthier institutions to differentiate themselves from weaker banks and free them from constraints on executive pay, and other activities, that come with bail-out money.
Some banks were pressured to take TARP money for the 'good of the system' even though they were healthy. Now they facing delays in giving the money back. And the Feds want to convert at least some of the loans into equity. There's a word this: 'nationalization'. And the healthy banks are the target, because they have something that makes taking them over worth it.
“Not surprisingly different banks are in different situations; they are going need different levels of assistance of taxpayers,” Mr Obama told a press conference at a summit in Trinidad on Sunday, while promising: “I’m not going to simply put taxpayer money into a black hole.”
Yet there was all that stimulus spending ...
The official, meanwhile, said banks that had plenty of capital and had demonstrated an ability to raise fresh capital from the market should in principle be able to repay government funds. But the judgment would be made in the context of the wider economic interest. He said the government had three basic tests. It needed first to “make sure the system is stable”. Second, to not create “incentives for more deleveraging which would deepen the recession”. Third, to make sure the system had enough capital to “provide credit to support the recovery”.

The official said former Treasury Secretary Hank Paulson was right to treat all the banks the same way in late 2008 at the peak of the crisis but it was now necessary to differentiate more between institutions. Stronger ones should be encouraged to raise more capital, while the government would target its interventions to support weaker ones.

“What we want is for the differentiation to be more based on knowledge rather than some big uncertainty.” He said the bank stress tests reaching completion would provide that basic information.

The debate over the respective funding needs of stronger and weaker banks comes as the Obama administration confronts deep political resistance to any further authorisation of federal funds to bail out the sector. On Sunday, Rahm Emanuel, Mr Obama’s chief of staff, told ABC that while some of the country’s biggest banks “are going to need resources”, the administration would not need to obtain more funding from Congress.
Posted by:Steve White

#15  I can just imagine the vernacular coming from the oval office with chief dick present (rahm) (well, or not, for that matter):
"SUCKERS!!"
Posted by: logi_cal   2009-04-20 21:26  

#14  CF, good point. I guess I'll have to take one for the team when he needs a brake job, eh?
Posted by: Cornsilk Blondie   2009-04-20 16:07  

#13  In Chicago. once you get bought you stay bought.
Posted by: Parabellum   2009-04-20 15:24  

#12  Ash TARP durbatuluk,
ash TARP gimbatul,
ash TARP thrakatuluk
agh burzum-ishi krimpatul.

One TARP to rule them all,
One TARP to find them,
One TARP to bring them all
and in the darkness bind them
In the Land of DC where the Porculus' lie.
Posted by: Saurobama   2009-04-20 15:21  

#11  Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest,..

That's what happens when you borrow from the [Chicago] mob. The loan payment never ends. I see no victim here. The bank operators play loose with other peoples money and thought they got a 'deal'. Now they've found out they've sold their souls. Their only hope is millions upon millions of prepaid under $200 debt cards they can flood the Trunks with in a year otherwise they're owned.
Posted by: Procopius2k   2009-04-20 09:05  

#10  But Cornsilk Blonde.... Just what sort of conditions are now on that Warranty on your brother's truck? Will he have to turn in a relative to DHS (as a right wing extreamist) in order to get a problem fixed?
Posted by: CrazyFool   2009-04-20 08:41  

#9  Hey, it's all cool. The guvmint knows what they're doing. Besides, they're backing the warranty on my brother's truck now, too.
Posted by: Cornsilk Blondie   2009-04-20 08:37  

#8  At some point they'd either have to accept the money or decide to use their TARP powers against me, at which point I'd sue.

At that points DHS receives info about you that it just must investigate.
Posted by: g(r)omgoru   2009-04-20 08:13  

#7  I'd do it a little differently but much in the same spirit as PBMcL and Sea: not on the front steps, but very publicly with a segregated account specifically marked for TARP repayment. Then I'd inform the Federal Reserve and the Treasury that since the money is there for them to take in repayment, I'm no longer bound by the TARP rules. At some point they'd either have to accept the money or decide to use their TARP powers against me, at which point I'd sue.
Posted by: Steve White   2009-04-20 08:03  

#6  I recommend that each bank wishing to return its TARP money open a 3-month CD for the full amount of the refund at 2% interest, in trust for the US Treasury, and inform TurboTimmy he may redeem the CD in late July.
Posted by: Seafarious   2009-04-20 02:29  

#5  I agree with Sea. This is odious and beyond dangerous to the Republic.

All U.S. currency carries the phrase "This note is legal tender for all debts, public and private." Any bank so threatened and capable of repaying now should bale up the cash, publicly dump it on the Treasury steps, and make sure there's lots of witnesses and publicity. If Zero squawks, take him all the way to the USSC if necessary. An unfavorable ruling there would be an open invitation to revolution.
Posted by: PBMcL   2009-04-20 02:13  

#4   “IÂ’m not going to simply put taxpayer money into a black hole.”

Lying bastard.
Posted by: Redneck Jim   2009-04-20 01:22  

#3  Bank executive: "Danes? I didn't order any Danes. I ordered a platter of danish. For our meeting!"

Delivery guy: "Sorry, sir. The receipt sez no exchanges, no refunds. But I can offer you this quart of lutefisk for only $3.99."
Posted by: Seafarious   2009-04-20 01:11  

#2  Welcome your new, socialist overlords.

Please leave all independent thought and actions outside.

Thank you.
Posted by: DarthVader   2009-04-20 00:50  

#1  Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest.

The hairs on the back of my neck just stood up. That is the most chilling phrase I have read...ever.
Posted by: Seafarious   2009-04-20 00:31  

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