re: #116 Conservative in Liberal Hands

Interesting Rumor - Banks and other Financial Institutions that were “encouraged” to take TARP funds are finding that they must hold on to the TARP funds to keep liquidity. Where are they putting their borrowed funds?

T-Bills! Imagine borrowing at 5 or 6 percent and receiving a measly 1.5 percent in return. Also, since they’re purchasing T-Bills the money really never when anywhere…

One bank I know of took their 5% TARP money and turned around and bought a basket of government guaranteed mortgages yielding 6.5%. Not a bad spread for taking zero risk.