I'll see your graphic and raise you. [strawman magic the gathering jpg that I am to lazy to find] 1. Interbank lending is more than it was before the bailout, hence the decline in the LIBOR-OIS spread 2. THe bailout was going to arrest the contraction of GDP in the span of a month? Whoever said that? This is so patently ridiculous that it's not worth explaining. Do you also believe that it was going to bring dinosaurs back to life and result in 24-hour Ninja guitar solos? Because by those measures it has also failed miserably - of course neither of those things were intended by it either.
This isn't remotely true. See earlier posts in this thread. The credit markets and commercial paper markets have eased considerably. And that was the exact intended purpose of the TARP! What exactly did you think the purpose of the TARP was? Of course the economy has contracted since - the point of the TARP wasn't to stop contraction. It was to stop things from falling off a cliff straight into a depression. We already knew things were going to get worse than better.
I don't think people realize that 700 billion is a small small percentage to the amount of money at stake. It's ungodly scary.
Again - why look at anecdotal evidence when you have the actual statistics available to you? We know the credit markets have eased, regardless of the comments of one company - we have the actual numbers. It's certainly not 100% complete yet - but nor is all the TARP money allocated yet. Its still a work in progress.
I still don't buy into the argument that banks needed tarp funds to make loans, why couldn't the gov't just provide the loans through their overnight lending operations? edit: I do believe the money should be designed to provide liquidity to prevent runs on banks, runs on banks is the only thing that is going to make a bank fail in the immediate future
More on TARP... http://briansullivan.blogs.foxbusin...r-the-government-is-making-money-on-the-tarp/ Gasp! Horror! The Government is MAKING Money on the TARP? By Brian Sullivan Despite being widely hated, ridiculed and otherwise smacked down by the public, the $700 billion dollar TARP program may turn out to be the best investment the taxpayer made all year. The folks over at Bianco Research (run by Jim Bianco, one of the smartest and most respected bond analysts in America) published a note today called “Tracking the Trust Cost of the TARP.” This is their conclusion: The Treasury infused $247.26 billion into 184 companies over the span of the credit crisis. In exchange for these bailouts, the Treasury received securities that are currently valued at $255.10 billion. This means the TARP bailouts have actually turned a profit for U.S. taxpayers as of this writing. After factoring in the current value of the securities the Treasury received in exchange for its bailout money, the Treasury has turned a net profit of $7.84 billion for a 3.17% return on investment over the period. There’s a phrase we don’t hear much these days, “turned a profit.” The primary reason, Bianco argues, has to do with the nature of the preferred share investments the government made: Every recipient of TARP funds, AIG and Citigroup excepted, had to agree to the same terms. In return for a capital infusion, the Treasury would receive 100% of the infusion value in the form of preferred shares of that company. This preferred pays a 5% dividend in the first three years and a 9% dividend after that. In addition, each company also would have to give the Treasury warrants equal to 15% of the infusion value. This follows a story earlier this week that government money-receiving insurance firm AIG sold some mortgage related assets to the government. From the story: In the deal announced Monday, the Federal Reserve Bank of New York made a senior loan to Maiden Lane II to buy the residential mortgage-backed securities for an initial purchase price of $19.8 billion. The six-year loan is secured by the $39.3 billion face amount of the securities and bears interest at one-month LIBOR plus 1%. Notice the sale price to the government is about 50% of the face value of the securities. Granted, that face value may be less today than it was when the loans were made, but it is highly unlikely the value of those assets has dropped by half. Additionally the government loaned the money to AIG and is making a few percentage points in interest. If the value of these assets rises, the government will be holding them on the books at more than it paid. Buying low, hopefully selling high. We are still in the early innings of the TARP game, but the very early score indicates that the much-maligned $700 billion dollar rescue program may actually give a little back for the use of your money and, at the minimum, we get to hear a bit of all-too-rare good news. It continues to amaze me to see people talk about the TARP as this massive failure (after 2 months) that's going to cost taxpayers $700.
The securities are "currently valued" at that much. Which day? cause when the marked swings 10% every few days its hard to say we are going to make money.
Wait a sec... just a few days ago people were telling me that $350,000,000,000 would be there when Obama took office. Now, it looks like it won't, with the auto bailout as a convenient excuse. The protestations by Dems amount to nothing... the administration will ask for the money within the next few days, Congress will put off action until after Christmas claiming everything will be OK, Repubs in the Senate will block passage, the clock will run out on the 15 days, and every dime will be gone by 1/20 and it will go wherever the administration wants it to go.
Where did you get that marks are moving 10% every few days? And are they always going in one direction? If so, which direction? And I agree - we have no idea if we'll make money at this point, though if the economy does recover, it's almost certain we will. But regardless - the point is that the whole crazy "we wasted the money! the TARP's a failure!" nonsense doesn't hold. It may turn out to be true if we go into a depression, but as of yet, the evidence we do have is on the opposite side.
Banks won't tell how they are spending bailout. From the AP http://www.msnbc.msn.com/id/28344965 Where'd the bailout money go? Shh, it's a secret Banks unable or unwilling to disclose how they're spending billions in aid WASHINGTON - It's something any bank would demand to know before handing out a loan: Where's the money going? But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it. "We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to." The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest? None of the banks provided specific answers. "We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars. Some banks said they simply didn't know where the money was going. "We manage our capital in its aggregate," said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout. No strings attached The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion — about the size of the Netherlands' economy — to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money. There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that's happening and there are no consequences for banks who don't comply. "It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry," said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout. But, at least for now, there's no way for taxpayers to find that out. Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent. "Those are legitimate questions that should have been asked on Day One," said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. "Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?" Nearly every bank AP questioned — including Citibank and Bank of America, two of the largest recipients of bailout money — responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis. A few banks described company-specific programs, such as JPMorgan Chase's plan to lend $5 billion to nonprofit and health care companies next year. Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp., said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes. But no bank provided even the most basic accounting for the federal money. "We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion. Others said the money couldn't be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money "doesn't have its own bucket." But he said taxpayer money wasn't used in the bank's recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn't being tracked, Denham said the bank would have made that deal regardless. Others, such as Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: "We are going to decline to comment on your story." Why the secrecy? Most banks wouldn't say why they were keeping the details secret. "We're not sharing any other details. We're just not at this time," said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government. Heine, the New York Mellon Corp. spokesman who said he wouldn't share spending specifics, added: "I just would prefer if you wouldn't say that we're not going to discuss those details." The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent. Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending. "What we've been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we're doing this," Paulson said at a recent forum in New York. "So we're building this organization as we're going." Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they've spent the money. "It would take a lot of nerve not to give answers," she said. But Warren said she's surprised she even has to ask. "If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn't be in a position where you're trying to call every recipient and get the basic information that should already be in public documents," she said. Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went. "A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal," he said.
Oh what I would give to never send another cent to banks, bankers, or anyone affiliated with the banking industry. **** them. **** them all.
The credit union where my mother has been trying to convince me to join has been advertising that they didn't make bad mortgages and won't participate in the bailout. They may be blowing smoke, but it worked on me. I've opened an account, and I'm in the process of moving my Chase account over. Chase has lost my few thousand bucks based on total disregard for the taxpayer.
My only account with a "bailout bank" is my home loan with chase. I would not mind refinancing to a "non-bailout bank" but that is such a pain in the ass. And my rate is already very low. Sigh.
Chase didn't have a choice when participating in the TARP Capital Purchase Program. Jamie Dimon has said that they did not want the money but was basically forced by the government to take it because there were a few banks that did need it, but the goverment didn't want to single them out.
