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Remember the 700 billion dollar TARP fund that has the Tea Parties in a tizzy ? Few have noticed the real cost may be 50 billion, or even less. Some predict we’ll actually show a profit in the end. We can’t prove what would have happened without it, but we can prove it won’t be a “700 billion dollar bailout” when most of it is repaid.
13 comments
1 |
Buck Mon, Oct 4, 2010 12:03:32pm |
I think you misunderstand where the real anger comes from.
The banks were bailed out. Immediately afterwards it was business as usual. They kept their jobs, and bonuses. They still spent and lived the good life. (at least that is the perception), where the the regular Joe’s are still 12% unemployed and still suffering.
Also the money was supposed to be used to not only ‘bail them out’, but to grease the skids on lending… people still feel that lending has not returned to the regular Joe.
And the third thing (I think) is that the anger is over how no one ever counts the debt (bailout) given to Fanny and Freddie. They always seem exempt. From the money count, and from new regulations.
I think that is where most of the real anger is coming from, and if the administration misses that, they will have missed most of the point.
| 2 |
avanti Mon, Oct 4, 2010 2:04:55pm |
re: #1 Buck
I think you misunderstand where the real anger comes from.
The banks were bailed out. Immediately afterwards it was business as usual. They kept their jobs, and bonuses. They still spent and lived the good life. (at least that is the perception), where the the regular Joe’s are still 12% unemployed and still suffering.
Also the money was supposed to be used to not only ‘bail them out’, but to grease the skids on lending… people still feel that lending has not returned to the regular Joe.
And the third thing (I think) is that the anger is over how no one ever counts the debt (bailout) given to Fanny and Freddie. They always seem exempt. From the money count, and from new regulations.
I think that is where most of the real anger is coming from, and if the administration misses that, they will have missed most of the point.
OK, why the bitching on the right when the administration tried to regulate the industry and and limit bonuses. It was accused of class warfare and being anti capitalist.
| 3 |
Buck Mon, Oct 4, 2010 4:57:00pm |
re: #2 avanti
OK, why the bitching on the right when the administration tried to regulate the industry and and limit bonuses. It was accused of class warfare and being anti capitalist.
What you might have missed was how much the industry WANTED the new laws and regulations. Why because it came with a slush fund for future bailouts. A huge fund that can be tapped for future irresponsible behavior where even the small can be to big to fail. A $50 billion fund called for by the bill that would pay for dissolving failing firms that pose a risk to the financial system. It is that part of the bill that the right opposed.
Applauding and supporting the Obama administrations new regulations were the Chairman of Goldman Sachs. He knows his companies donations and monetary support of Obama is going to pay off 100 to 1. Not that Goldman Sachs is going to dissolve anytime soon, BUT it makes it easier to absorb the business the smaller companies take the bailout.
| 4 |
Buck Mon, Oct 4, 2010 5:14:52pm |
BTW, those regulations, and the “Tarp good news” leave out the Fannie and Freddie enterprises. Exempt from the regulations, and the accounting quoted in the top post. So far those two “banks” have taken $125 billion from the treasury, and they is NO plan to pay it back. In fact another $25-$30 billion is expected to help keep them afloat.
The top three Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Dodd, Christopher J S CT D $165,400
Obama, Barack S IL D $126,349
Kerry, John S MA D $111,000
Sure some money went to Republicans, but there is a tea party anger about that to. You might notice some ‘republicans’ got booted to the curb as well.
However, how long was Obama in campaign mode from 1989-2008? How many years did it take to put him second on the list?
| 5 |
Linden Arden Mon, Oct 4, 2010 6:58:06pm |
re: #3 Buck
What you might have missed was how much the industry WANTED the new laws and regulations. Why because it came with a slush fund for future bailouts.
That is absolutely false.
FinReg contains the opposite - liquidation authority with a fund to provide debtor-on-possession finance in order to dissolve the corporation.
No CEO would want that.
| 6 |
alexknyc Tue, Oct 5, 2010 4:17:34am |
re: #2 avanti
OK, why the bitching on the right when the administration tried to regulate the industry and and limit bonuses. It was accused of class warfare and being anti capitalist.
I’m not exactly a right-winger but even I bitched when the administration tried to limit bonuses.
First and foremost, those bonuses were contractually obligated. The Constitution is quite clear on the sanctity of contracts and the government being prohibited from doing exactly what they were trying to do.
Second, a large part of the economy of the financial district depends on those bonuses. Without them, restaurants and shops go out of business, pushing more people onto the unemployment rolls. Also, there would likely be a number of high-end apartment foreclosures.
I’m still on the fence about the bailout but I’m amazed that the government didn’t add any provisions about requiring a certain percentage of the money to be lent out. Banks got their money and either used it for mergers or sat on it as a reserve.
| 7 |
garhighway Tue, Oct 5, 2010 6:00:26am |
re: #3 Buck
What you might have missed was how much the industry WANTED the new laws and regulations. Why because it came with a slush fund for future bailouts. A huge fund that can be tapped for future irresponsible behavior where even the small can be to big to fail. A $50 billion fund called for by the bill that would pay for dissolving failing firms that pose a risk to the financial system. It is that part of the bill that the right opposed.
Applauding and supporting the Obama administrations new regulations were the Chairman of Goldman Sachs. He knows his companies donations and monetary support of Obama is going to pay off 100 to 1. Not that Goldman Sachs is going to dissolve anytime soon, BUT it makes it easier to absorb the business the smaller companies take the bailout.
Bullshit. The big financials fought Finreg tooth and nail.
| 8 |
garhighway Tue, Oct 5, 2010 6:42:25am |
re: #6 alexknyc
I’m not exactly a right-winger but even I bitched when the administration tried to limit bonuses.
First and foremost, those bonuses were contractually obligated. The Constitution is quite clear on the sanctity of contracts and the government being prohibited from doing exactly what they were trying to do.
Second, a large part of the economy of the financial district depends on those bonuses. Without them, restaurants and shops go out of business, pushing more people onto the unemployment rolls. Also, there would likely be a number of high-end apartment foreclosures.
I’m still on the fence about the bailout but I’m amazed that the government didn’t add any provisions about requiring a certain percentage of the money to be lent out. Banks got their money and either used it for mergers or sat on it as a reserve.
True and not true. Some of those bonuses were contractually required but many were not. And many that were required were not necessarily required in any particular amount.
And the “pay the trader a million dollars so he can buy a sandwich from the deli” argument does not fly, especially if the million dollars is public money. The TARP companies took a long time to figure out that operating with public money is different than business as usual.
But overall, TARP was a good idea. It stabilized the financial services industry at a point when the economy was on the brink of collapse. Without it, we’d have been up the creek.
| 9 |
alexknyc Tue, Oct 5, 2010 1:55:49pm |
re: #8 garhighway
True and not true. Some of those bonuses were contractually required but many were not. And many that were required were not necessarily required in any particular amount.
And the “pay the trader a million dollars so he can buy a sandwich from the deli” argument does not fly, especially if the million dollars is public money. The TARP companies took a long time to figure out that operating with public money is different than business as usual.
But overall, TARP was a good idea. It stabilized the financial services industry at a point when the economy was on the brink of collapse. Without it, we’d have been up the creek.
I’m not privy to the actual language of the bonus clauses in the contracts (perhaps you are). What I do know is many of them were contractual obligations and, as such, the government is strictly prohibited from interfering with their disbursement. If they didn’t want the bonuses paid, the only option was to not give money at all which, as you say, would have left us up the creek.
As for your second point, no one made a “pay the trader a million dollars so he can buy a sandwich from the deli” argument.
The economy of lower Manhattan rests on the fortunes of Wall Street. Without those bonuses, the employees (and owners) of the businesses down there would have been up the creek.
I get that you’re a fan of TARP and I get that you resent the bonuses given out, but even so, these things are subject to the law of unintended consequences— and the collapse of the economy of lower Manhattan would have been one of them.
I also get that you think the collapse of the American economy would be a bad thing. So why would the collapse of the Lower Manhattan economy be ok by you?
| 10 |
Buck Tue, Oct 5, 2010 5:31:19pm |
re: #5 Linden Arden
That is absolutely false.
FinReg contains the opposite - liquidation authority with a fund to provide debtor-on-possession finance in order to dissolve the corporation.
No CEO would want that.
Goldman Sachs wants regulation, not laissez-faire
The whole article backs what I am saying. And I really hope you read the whole thing, BUT this is good:
Consider the recent flap over the $50 billion resolution fund in the Senate bill. Banks didn’t like the resolution fund, because it would be capitalized by a bank tax. Republicans rightly attacked the bill for institutionalizing bailouts, but focusing on the $50 billion was a bit of a distraction. Some leading Democrats are now ready to back away from the $50 billion and the bank tax, which just means that we now have unfunded implicit bailouts. The banks win.
| 11 |
Buck Tue, Oct 5, 2010 5:35:06pm |
re: #9 alexknyc
I get that you’re a fan of TARP and I get that you resent the bonuses given out, but even so, these things are subject to the law of unintended consequences— and the collapse of the economy of lower Manhattan would have been one of them.
Somehow the government was able to screw the GM shareholders, let the companies stock go to ZERO, BUT still pay off the Unions, and debt holders… and therefore honor the contracts selectively. Anyway the anger is coming from the place where the executives were able to recover so quickly, and yet unemployment is still at 12%
| 12 |
Glenn Beck's Grand Unifying Theory of Obdicut Tue, Oct 5, 2010 6:25:40pm |
re: #3 Buck
You’re lying again, Buck.
| 13 |
alexknyc Tue, Oct 5, 2010 6:26:59pm |
re: #11 Buck
Somehow the government was able to screw the GM shareholders, let the companies stock go to ZERO, BUT still pay off the Unions, and debt holders… and therefore honor the contracts selectively. Anyway the anger is coming from the place where the executives were able to recover so quickly, and yet unemployment is still at 12%
The bond holders are always the first to be paid in bankruptcy. The shareholders are often screwed by that process. It’s part of the risk of buying stock.
There’s no selective enforcement of contracts in that.
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