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chill_wind Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-30-11 04:59 PM
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2. K & R
Speaking of BofA incidentally, just saw this today:

Naked Capitalism
Yves Smith



Quelle Surprise! SIGTARP Report Finds Citi, Bank of America Allowed to Leave TARP Prematurely


We said at the time it was inexcusable for the Treasury to allow banks to repay the TARP as early as they did (US banks are still below the capital levels many experts consider to be desirable; Andrew Haldane of the Bank of England has made a well-substantiated case that higher capital levels cannot remedy the problem, since the social costs of a major bank blow up are so great, and you therefore need very tough restrictions on their activities).

And why were the bank so eager slip the TARP leash? To escape some pretty minor restrictions on executive compensation. This had NOTHING to do with the health of the enterprise and everything to do with executive greed. And not surprisingly, Treasury indulged it.

(snip)

SIGTARP is upset that the Treasury went through the stress tests, which among other things, determined how much capital the banks would need to raise, then ignored its own findings. The SIGTARP discusses that Treasury effectively made up on the fly how much more capital the banks would need to scrounge up, with the required number being lower than the stress test number.

Let’s put aside the fact that this blog and quite a few financial services experts not in the pay of the banks or dependent on their good will (like equity analysts needing access) called the stress tests a sham. We’re surprised that SIGTARP finds this Treasury shell game (of allowing the banks to get away with raising less dough than the stress tests indicated) to be a surprise. We reported that this was Treasury’s plan back in May 2009:



more:

http://www.nakedcapitalism.com/2011/09/quelle-surprise-sigtarp-report-finds-citi-bank-of-america-allowed-to-leave-tarp-prematurely.html

(bold and italics mine)

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