http://www.cnbc.com/id/34239400 Bank of America is announcing that it's repaying the full $45B in TARP funding. They were considered (along with Citi and AIG) amongst the 3 riskiest TARP recipients. The amount of potential TARP losses just keeps dropping.
The biggest driver is the salary cap on executive pay. The GOP was criticizing the pay czar, but it's the primary driver to repay TARP. They are struggling to find a replacement CEO for Ken Lewis, who was forced out by the board of directors and is gone at the end of the year. The salary is the main problem. Bank of America moves the earth to sell $18.8 billion securities to get enough capital to repay TARP. It was a brilliant job by the White House. AIG, GM, Chrysler are still duds and will destroy any interest profit made on Bank of America and other banks. It did stop the auto manufacturing, auto parts and fabricated metals sector from going into a economic death spiral though.
TARP didn't tank the dollar. It's going to have somewhere close to a net zero cost to the gov't (plus/minus 100B or so). By the way, the dollar NEEDS to tank. We've been running a trade deficit for a very long time now. The natural consequence and "fix" for that is the weakening of the currency to make imports less attractive and exports more attractive.
I don't think the government needs any convincing to tank the dollar. It's the creditors they need to justify it with.
who thought the tarp wouldn't do what it said it would do? It was the prospect of purposefully propping up another bubble(best case scenario) or a never ending 10 year depression (worst case) that scared everyone. It only makes sense the first people to get the new money will always have an advantage over everyone else. Also, you don't shoot yourself in the foot to run faster. If the govt. wants to encourage exports, maybe it should focus on helping american factories cut costs so they can sell more abroad rather than making us all poorer (reducing imports by making them all more expensive.
Add Citibank to the list of TARP repayers: http://www.cnbc.com/id/34350090 Now AIG and GM/Chrysler are the only large high-risk recipients left.
Manufacturing is always going to be cheaper overseas. How do you convince CEOs to keep jobs here when corporations, right now, are making a profit but refusing to hire more Americans? All the money in the hands of stock holders and CEOs don't mean anything if people are unemployed. Today there's a corporate culture of just getting rich and leaving. Family names are rarely tided to the CEO's that's running the companies, and long term investment means 2 years. How do we fix this, I don't know.
By realizing that the corporations are doing what the business schools teach them to do: create wealth for shareholders at any cost. They are not there to do good for their community, their country, or the world, they are there to create wealth for the people who own the company. As such, they need strong regulation to assure that they are REQUIRED to do the right things for their community and country as they pursue their goal of maximizing wealth.
By that definition, each person on this board is as much to blame when they buy the cheapest good instead of the one built here.....companies are just reacting to what people want - low prices, all else be damned
Actually, the onus should always be on the big players, not the people on this board. Their impact, sophistication and hence responsibility is exponentially higher than retail customers. You will buy what's cheapest. They can decide what's cheapest.
As of yesterday, the government said they intend to be out of Citibank by January, and it's now projected to make a $7-$10 billion profit for the government. In addition, AIG is now expected to pay back all $180 Billion of rescue money from both TARP and previous bailouts. With TARP ending next week, it's interesting to see the results. The only real money losers from it are from the auto companies, and even those may still turn out OK depending on GM's IPO. I haven't done the math, but I think the profits from all the banks actually covers the cost of the car bailouts. So at the end of the day, Democrats (plus Bush) passed a policy that saved the entire US financial sector and the US car sector and saved literally millions of jobs at a cost of exactly $0. Republicans in Congress - those guys that want control now - stood opposed to that. People should think about that. And anyone who doubts the ability of government to accomplish big things when done properly should re-evaluate their stance on government.
I hate that banks profit riding up bubbles...and we're going to bail them out every time. But the only alternative is nationalizing banks....allowing the entire financial sector to crumble is absolutely suicide for the entire economy. It's different from every other sector in that way. This has all happened before...and it will happen again. We don't move from good time to good time...we lurch from crisis to crisis. And it seems almost every crisis is preceded by some form of deregulation in the financial sector.
Great, so everybody has "announced" they are going to do this and that. Politics is all about being seen while doing something good. Making an announcement is just that. We're all saved.
