Wow. Who could have predicted there would be little oversight of the program and even less of a burden placed upon those institutions receiving money from TARP? Good thing we acted NOW! even though nobody can identify anything that's really worked and nobody can assure anyone that this is doing anything but giving money to Wall Street with no strings attached. Yes, acting NOW! instead of waiting to understand the problem and craft a genuine response was definitely the way to go because you have to trust the brilliant Wall Street minds that got us here and they were all for acting NOW!, as were their little acolytes. Like being called a "traitor" for voicing opposition to the Iraq War, some people were accused of wanting Western civilization to collapse because they questioned this outrage. Good thing none of us here were in such awe of the great minds of Paulie and his ilk that they stooped to such ridiculous assertions. Oh, and by the way, Paulie is reconsidering his earlier "decision" to leave the other $350,000,000,000 for the Obama administration. Again, who could have predicted? Not to mention, who could have ever guessed that Repubs would delay oversight appointments and play round-robin with their appointees to oversight boards? It's almost as if they don't want any oversight at all between now and January 20... but I know that's wrong because people here have told me that this is a national crisis and above politics and that the great Wall Street minds they worship would not allow such things to happen. Good thing we're not in a recession.
You could have saved yourself a lot of typing by just typing "TOLD YA SO!" - it wouldn't have been entirely accurate but more or less substantively the same. I like your "waiting to understand the problem" line though - like Obama said when McCain floated this same do-nothing logic, that's the oldest trick in the book.
This is not an anti Tarp statement Providing more isn't going to ease credit markets, the credit decision are being made based on the borrower. Just because you give a bank cheap money doesn't meant they're going turn around and lend, as a matter of fact its a big part of the reason we are in this mess.
Is the above the type of poignant commentary that basso should provide in his threads when posting links?
he always provides it, he just says people who disagree with him root against america. edit: this is actually a funny thread you would choose to defend basso in because if its one thing this thread proves is that the guys who are usually considered liberal can disagree, while basso usually argues on party lines. just find it ironic, don't want to turn this into a basso commentary
Except the problem was that credit was unavailable for quality borrowers. And providing more DID help ease the credit markets. While the economy is still not healthy (that will take time), the credit markets have certainly eased. And the new program last week has seen mortgage rates drop 0.5% in a few days, and potentially that much more in the next few days. It's certainly still a work in progress - no one ever claimed or suggested it would be an overnight cure. The problem is morphing as conditions change, as is the solution. That's exactly how it should be.
Yes because then we could say why it's wrong. For example, the above post doesn't attempt to address some of the biggest problems that the immediate passage of TARP was meant to help, albeit indirectly - one of which was the death throes of the institutional credit market. A good measure of the health of this market is the Libor OIS spread. If one looks at the graph of the Libor-OIS spread over the last few months it has fallen nearly as rapidly as it ascended since TARP got in the works. (though it has plateaued and remains way too high and even has upticked a bit over the last few weeks). There's a lot of issues with TARP, with that I agree. But the whole picture is not that easy given the incredible scale of catastrophe that doing nothing could possibly have resulted in. There seems to be an assumption that it should be a panancea when in reality it was a stopgap solution to prevent total collapse. If they had it to do differently again I'm sure they would, though if they had a do-over on the whole thing I think allowing the Lehman collapse would be the first thing they'd change. Anyway, TheFreak I look forward to reading your response on this issue. I trust you won't disappoint.
I totally disagree, not every bank was in trouble, if a bank has money, it wants to lend to quality customers. well fargo, chase, local commerical banks certainly have money to lend and will lend if they aren't in trouble. edit: and again my first post wasn't anti Tarp, its more about credit and banking, I'm not anti Tarp, I think the biggest issue is not letting the banks fail, which I hope it prevents
I know people that filed for bankruptcy a few years ago and still can get credit. I bought a new car, and nobody asked for verification of my wages or my wifes. $17,000 no downpayment. The credit crisis is a crisis for bad lenders, and people at high risk. TARP was a mistake. Congress knows it. They rushed to get something done just to look like they were doing something.
I'm not sure the relevance here. Of course there are exceptions and unique circumstances and stupid lenders. But the reality is that perfectly healthy companies were unable to get short-term credit and manage their day-to-day operations. There's no reason GE or the State of Calfornia should have been unable to get short term 2-4 week cash management loans. It may vary by region or bank or whatnot - but it doesn't change the underlying facts that people who had no reason to not be able to get short-term credit were unable to get it. See SamFisher's post for a bit more details on things like the LIBOR-OIS spread.
Can you point to a single dime that has been lost by the government so far in the TARP? A single loan they've given that's defaulted or a single investment they have made that has gone under?
Nobody was lending to each other after Lehman suddenly collapsed and a major money market fund bit the dust in its violent wake. TARP was designed to be half psychological (Paulson admitted he didn't know the exact number he needed) and in that respect it succeeded by not sustaining a violent death spiral of sell offs and hoarded credit. The root of the problem is that financial institutions are black boxes. When we bailed out Bear Stearns, moral hazard came into play, and that made information about those institutions even more opaque. No way in hell would a responsible regulator bail out AIG then with what we know now. So you had greedy and arrogant CEOs not accepting buyout/merger offers with their depressed stocks and bet against the government by playing chicken with them. With Lehman, no one blinked. When they filed for bankruptcy no one was prepared for it. There was no immediate mechanism for recovery or settlement of debts... Now that Paulson has changed his mind yet again, the actual structure behind the original bailout will be intensely questioned, and it should be. While the intent to untangle short term lending has somewhat been successful, the long term execution of it has been a disaster from the beginning. If I were a betting person, I'd think Paulson is burning up the remaining 350 billion because he and his buddies are assuming Obama admin will print up an equally enormous sum in the future.
Except if the entire US financial system collapses, then Wells Fargo is likely to have higher default rates, meaning they need to hold on to cash to avoid running into their lending margin requirements. So as long as the whole system is cratering, even the healthy banks aren't going to lend, because they would get sucked in just like everyone else. You have to stabilize the financial system for them to lend - and that was the purpose of the TARP. As far as getting money, I agree that some of those banks didn't need the capital infusions. But if they are perfectly healthy, there's no cost for the government because they are buying depressed shares in a perfectly healthy bank that they can sell back when the whole system is more stable.
Interesting you would take such a caustic tone. Oh wait, you're one of the guys who supported this without qualifications. Told ya so. Please. Comparing wanting to do something but not trusting the Bush administration to do it is not the same thing as do-nothing, though given their track record, do-nothing is better than letting them do whatever they want. To use the analogy of the time, if you have a house fire, you don't just start squirting water. You look at the structure, try to gather intel about household chemicals or guns and ammo inside, and base your response on that info. It does no good to save the garage if the house burns down. Problem is, we don't know what is house and what is garage and what is shed... and the Bush administration is pouring the water down the drain so it can be gathered and sold back to the fire department.
The premise of your questions is absolutely ridiculous given the GAO report. We can't identify where the money went and what happened to that money when it went.
Really? This took me all of 17 seconds to find. That's $203 billion right there, as of Nov 11th. We also know the more recent $20 billion for the TALF or whatever it's called as well as the Citigroup investment from a week or two ago. That's the vast majority of what's been spent right there. I'm going to guess if someone did more than 17 seconds of research, they could find a lot more. The TARP has so far committed the following funding: AIG $40 billion JPMorgan $25 billion Citigroup $25 billion Wells Fargo $25 billion Bank of America $15 billion Merrill Lynch $10 billion /1 Goldman Sachs $10 billion Morgan Stanley $10 billion PNC Financial Services $7.7 billion Bank of New York Mellon $3 billion State Street Corp $2 billion Capital One Financial $3.55 billion Fifth Third Bancorp $3.45 billion Regions Financial $3.5 billion SunTrust Banks $3.5 billion BB&T Corp $3.1 billion KeyCorp $2.5 billion Comerica $2.25 billion Marshall & Ilsley Corp $1.7 billion Northern Trust Corp $1.5 billion Huntington Bancshares $1.4 billion Zions Bancorp $1.4 billion First Horizon National $866 million City National Corp $395 million Valley National Bancorp $330 million UCBH Holdings Inc $298 million Umpqua Holdings Corp $214 million Washington Federal $200 million First Niagara Financial $186 million HF Financial Corp $25 million Bank of Commerce $17 million TOTAL: $203.08 billion
I can respond to your 17 seconds with an 11 second search. From the GAO report... http://www.gao.gov/new.items/d09161.pdf (Via TPM) Given that, I stand by my statement. Sure, you can say this institution got this much, and if that provides you some comfort, that's great. But the fact is that we don't know what happens to the money after it is given out and we cannot measure what effect, if any, those funds are having on our economic situation.
You're aware that major elements of the financial system were collapsing in literally days and erasing trillions of dollars of value in that same time period, correct? And that it was snowballing and dominoing all over the place, right? Why do you think that it could last for another 4 months without intervention - why do you think Obama himself voted for it, becuase he was conned into it by the Bush Administration? And you're also rewriting history a bit. The first criticism of the TARP was that it was too much discretion (one that I believed you lodged). Then it was that the buying assets plan was stupid and it should be capital stakes. Then the Euros came up with a capital stake plan (after their initial refusals to do any bailout) and a few weeks later TARP was modified (due to the discretion in the statute that you opposed and stil oppose) into buying capital stakes, which IIRC you said you supported. Again why do you feel that the fire would have been contained? They thought that with Lehman and the results were really bad, not just for wall street but for main street. You haven't provided any justification or evidence in support of this ever.
