I think TARP wasn't to keep them lending, I think it was to keep them breathing.

[Phoebe Loosinhouse]

That's why no one can see any benefit to the funds to date. It just kept the doors open and bought some time. I think that is what Geithner was referring to when he said that banks were going to go through a "stress test".

Some will drop dead. Some will be on mechanical assistance until their vital organs can be harvested and transplanted. Some will get transplants and therapy and learn to live an almost normal life. Some will simply be put on a healthier diet and told to make better choices.

[MADem]

1. Yeah, that's why they didn't do jack with the first pile of cash.

There hasn't been anything done with that pile--it's merely there to secure their outstanding paper.

[blm]

2. BushInc also overpaid by 78 billion to help wipe out their 'Enron style' accounting problems

Wink and a nod....

[high density]

3. It seems that's the case

But it was sold to us as a way to clear up the credit "ice jam." Where would we be without it? Probably in a worse position. That said, the banks need to start extending credit at some point or else it's time to nationalize them. We can't keep giving them money to fund dividends and acquisitions.

[lumberjack_jeff]

4. Exactly right.

They're being kept alive long enough to do triage.

[JFKfanforever]

5. TARP I was a failure... Restrain Geithner until it is investigated

US lawmaker probing oversight of bank aid program

WASHINGTON, Feb 9 (Reuters) - A U.S. House subcommittee will
hold a hearing early in March to investigate whether the
Treasury is getting enough information from banks to oversee
the bank rescue program, Rep. Dennis Kucinich, the panel's
chairman, announced on Monday.

Kucinich, an Ohio Democrat who heads the Domestic Policy
subcommittee of the Oversight and Government Reform Committee,
recently sent requests for documents to the largest recipients
of money from the Troubled Asset Relief Program (TARP), as the
bank bailout program is called.

The subcommittee will examine these records as well as look at
how the Treasury is analyzing the documents received from TARP
recipients, Kucinich said in a statement.

"After handing out billions to banks, we have an
obligation to the taxpayers to look at all the ways that banks
are using TARP funds, whether it's marketing, lavish parties,
executive salaries or legitimate purposes," Kucinich
said.

The lawmaker's interest had been piqued by the recent news
that Citigroup Inc (C.N), recipient of billions of bailout
funds, had a $400 million baseball stadium sponsorship deal
with the Major League team, the New York Mets. Kucinich has
urged the government to press Citigroup to end that contract.
(Editing by Kenneth Barry)

~~~~~~~~~~~~~~~~
http://www.financialcrisisupdate.com/2009/02/kucinich-a... 


February 06, 2009

Kucinich Asks Citigroup: “TARP Money Not for Advertising?
Prove It”

Rep. Dennis Kucinich, D-Ohio, Chairman of the Domestic Policy
Subcommittee of the Oversight and Government Reform Committee
has sent a letter to the chief executive officer of Citigroup,
Vikram Pandit, requesting documents that would pertain to
Citigroup’s request and use of funds allocated to Citigroup by
the Treasury Department under the Troubled Asset Relief
Program (TARP). Kucinich made the request following media
reports in which Citigroup has maintained that none of its
TARP funds were used or would be used to pay $400 million for
naming rights for Citi Field, the new New York Mets’ stadium
built with tax exempt bonds.

http://domesticpolicy.oversight.house.gov/story.asp?ID=... 

[jwirr]

6. That is why some of the money went to stockholders. To keep them

in the system. However, I doubt that the CEO abuses were ever part of the plan.

[Kahuna]

7. DING DING DING DING DING! It's major focus was to stop a run on the banks..

How soon people forget the lines of people at banks wanting to withdraw all of their money. I get so weary of the, "TARP was a colossal failure," chorus. It was not. I did stop a run on the banks.

[Phoebe Loosinhouse]

8. Exactly. And I'm fine with that. And I'll always be fine with that.

No one could see ashy-faced Hank Paulson who looked like he had a barf bag in his back pocket and not think something huge was up. I give them credit for managing to do it. Saving the banking system is a good thing.

[renate]

9. a friend of mine is a RESPONSIBLE investor and he said,...

... on the Friday after the house of cards started falling down in September, that ATMs would not be working the next week. He and his family had been storing food because he knew that what was going on in the housing market, and how it was happening with the bad loans etc, was unsustainable, not just in terms of the economy but the banking system itself.

This guy is a pessimist, but not a survivalist... but because of what he was seeing, he really believed that the economy would literally and completely collapse. So we didn't get our money's worth out of the bank rescue, but at least we can still use our credit and debit cards.

[TheBigotBasher]

10. The economy got its penneths worth

but all it did was provide a base for what should have been there in the first place. The logic of fractional reserve lending is fine, but there has to be that fraction there. The banks had not even bothered to keep a decent reserve. Loans and deposit values became totally unrelated.

All that the original plan did was provide the base for existing lending requirements. Not new debts. Unless banks create loans, they will not profit, except of course if they jack up interest charges to existing customers.

At some stage this does have to be recognised as corporate welfare and it is the the everyday bod paying the price - twice. Taxes to help the body that is chasing for the debt alive and a much much higher level of interest rate.

[sandnsea]

19. *sigh* You can use the ATM

because you DID get your money's worth out of the bank rescue. That's exactly what many here were saying at the time. That was the entire point. More would probably have to be done, but the initial TARP was to keep the ATM's open. Now we're going to try to fix the rest. And we'll probably have to do more 6 months from now.

[WinkyDink]

12. I don't remember these lines.

[Kahuna]

14. I can't help what you don't remember. ..

on edit: a simple google that even the lazy can perform would yield Indymac and Wamu. Got it now?

[OwnedByFerrets]

13. Prove it wasnt a failure. How can you prove it was successful?

Because certain banks didnt fail? How do you know they would have failed WITHOUT that money? You are taking the word of thieves and wall st charlatans that say it was successful. Please prove me wrong with facts.

[OwnedByFerrets]

11. You are very generous. It was theft, pure and simple. Where is the

money now?

[PBS Poll-435]

15. Wells Fargo just paid the government 371 million dollars in stock dividends

And after 3 years, they will be allowed to pay the government back.

[On the Road]

17. "Where Is the Money Now?"

It is in preferred stock. The Wikipedia article has a long list of the recipients and the amounts. As PBS-Poll 435 pointed out, the recipients are currently making interest payments and provided they stay in business will return the principal.

[On the Road]

16. Glad Some Other People Here Get It

I much prefer the way TARP was actually used -- to buy preferred stock -- to the original concept of buying bad assets, which would have exposed the taxpayers to much greater potential losses.

And since it's preferred stock, the question of whether the government paid too much seems to be moot. Unless the banks go belly up, the money will be returned with 5-6% interest no matter how the stock was valued.

[sandnsea]

18. And that's all we'll be doing for a while

But no matter how much evidence is put out there to prove how bad this economy is, some will always prefer to hang on to their cynicism and hate.

[Numba6]

20. I think you're right

Those screaming for 50 pounds of flesh from bankers miss what was really happening -- and a partisan crowd of Republicans are willfully misleading their talk show base on what the issue was.

& these were joined by so-called "left populists" who just wanna see some blood

http://politicalwire.com/archives/2009/02/10/how_close_we_came_to_total_meltdown.html

On C-Span, Rep. Paul Kanjorski (D-PA) explained how the Federal Reserve told members of Congress about an electronic run on the banks "to the tune of $550 billion dollars" within "an hour or two" last fall.

According to Kanjorski, on September 18, 2008 the Fed tried to "stem the tide" by pumping money into the financial system but it didn't work and decided instead to announce an immediate increase in deposit insurance to $250,000 per account to stop the panic.

Said Kanjorski: "If they had not done that, their estimation is that by 2 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it."

http://zerohedge.blogspot.com/2009/02/how-world-almost-came-to-end-at-2pm-on.html

[Phoebe Loosinhouse]

21. And I think you're right about the most partisan on both sides

not quite getting that we thankfully dodged a pretty serious bullet. Although I'm still cranky at the bankers (and will be for the foreseeable future) for getting us into the mess in the first place

Welcome and thanks for your post!

:hi:

[Numba6]

22. You'd think those "lefties" who spout the same nonsense as the most rabid right wing

Republican would give themselves pause, but that rarely happens

[Phx_Dem]

23. No, it was given mostly to

healthy banks in order to get a large infusion of cash into the credit market quickly, and a number of economists think it worked and keep the credit market from completely freezing up. The credit market is looser now, but still has a long way to go.

If the money was intended to keep them breathing, why give it to the healthy banks (at least some of them were healthy).

That was discussed a bit in today's Bank CEO hearing. The Wells Fargo CEO said his company has $100 billion in capital right now. As I understand it, according to their TARP contract, when they raise an additional $25 billion, they can pay back the TARP money.

[crimsonblue]

24. I'd like to add..

People think that the TARP fund would be distributed instantly and banks would be able to lend new money right away. Well, that's not the way things work. We will see increased lending this fiscal year, as bad debt is written off the books and banks are able to reach their leveraging limit again. Also, many banks are not able to receive funds, as they are the wrong type of corporate charter. In order for many Sub-S Corp. banks to receive funds, they'd either have to: a) change their charter to C Corp status (which would likely require approval by the board of directors and a vote by the shareholders), or b) Congress needs to change the terms of the TARP program to allow a larger variety of banks to participate.

On a different note, the TARP should be limited SOLELY to commercial banks, and Investment banks and Credit Unions should be disallowed from participating. Why? The reason we have the financial meltdown is the mixing of investment and financial banking, and Investment banks and Credit Unions haven't had to follow the same regulations as standard commercial banks.

[ellacott]

25. Great information, thanks

What kind of bank would GMAC be? A few months ago I read where they were trying to turn their financing company into a bank. Would this also help save it from being included in any auto bailout regulations?

[crimsonblue]

26. GMAC would be a credit agency.

Back in GM's heyday, GMAC was owned and operated by GM. As GM started facing persistent losses, they sold off their credit agency, and only own something like 20% of the company now. GMAC isn't a commercial bank, as they only provide lending, as opposed to depository and trust sectors. I could see GMAC being dissolved into a large national bank chain, but first they'd have to get their books in order; GMAC is currently a house of cards, that is one card short of toppling over.

[ellacott]

27. Thanks again for the information

:)

[crimsonblue]

28. no problem.

:D . I'm something of an amateur finance / economics enthusiast.

[DeschutesRiver]

29. Had you seen this list from Treasury

as to the exact amounts distributed and to whom? My dh found it last night, linked it in case I am not the only one behind the eight ball on this - you are probably already aware of it. I'd thought I'd heard Rachel and the woman running the senate oversight committee on where the funds went discussing why it was taking so long to figure out; and then up pops this list. Maybe they just got it out in the last day or so?? Maybe I just missed a gear on seeing this before?

http://www.ustreas.gov/initiatives/eesa/docs/transaction_report_01222009.pdf

I had no idea of how many banks received a TARP share, it was eye opening. And I completely agree that mixing investment and regular banking was the beginning of the end. I didn't like it at the time, years ago, and I hope we come out of this financial mess by eliminating such things in the future.

My bank was still insisting to us at the end of the year that they had no need of tarp funds, and had no plans to take them. They finally said told us they did in January, but it was common knowledge on MSM by then. The list shows they took TARP back in November, while they were telling us the opposite. Might have been that staff/employees weren't told about the funds when taken, so only passed on the knowledge they had, but still disconcerting. About as much to me as when I heard Ben B. say in testimony the other day that BAC was pretty much insolvent (or words to that effect). Still hoping I heard that wrong.

[Phoebe Loosinhouse]

30. I just have to say that I can't imagine that any publicly traded bank would be a Sub-S Corp.

I wouldn't even think that was possible, but of course I could be mistaken.