Financial institutions are so grateful for TARP, they'll stop trying to screw people over, and take less risk because it's the patriotic thing to do. Ha! http://dealbook.nytimes.com/2013/01...out-a-i-g-may-sue-its-savior/?smid=fb-nytimes AIG wouldn't even have shareholders in the present if it wasn't for the federal government.
the left's solution is to empower the state to ban risk taking (via force) the right's solution is to disempower the government from rewarding risk taking and let poor risk takers fail (no force)
Yeah, the first is much more preferable, because even without moral hazard, the banks would be rolling around in risk. and without any regulation, that gets even worse. circa panic of 1907. (plus private agents just tend to try to screw over people, as the former AIG story can attest to. stronger government regulation is needed to counter stronger moral hazard.) And no, banking doesn't work like Darwinian evolution. Letting poor risk takers fail doesn't lead to "lessons" being imprinted, and weak banks relegated to the sideline forever. See: every financial crisis ever, than the next financial crisis. Even when the government worked explicitly to make the crisis worst by "budget balancing" during the Great Depression, and let certain institutions fail, the financial system is still (and perhaps always will be) a profligate casino of risk-taking. That just has to do with how capitalism is set up to be at the moment.
Letting the financial system collapse would have resulted in something far closer to that than we had. Yes - and that was WITH saving the financial system. This is odd logic. So collapsing now for sure is better than possibly, theoretically collapsing at some unspecified point in the future if things go wrong? That's like saying we should let a heart attack patient die now because they might have another worse heart attack later if they don't fix their diet. And it's not going to be qualitatively worse down the road - lots of things haven't changed, but plenty of other things have changed to reduce the potential disaster (FinReg stuff). And TARP hasn't created moral hazard - if anything, it did the opposite by bringing to life the tea party and the anti-bailout culture that it created. If banks collapsed today, TARP would be dead on arrival in Congress. We are now much more willing to cut off our nose to spite our face today than at any point in our history.
macbeth, please make an argument that's relevant rather than showing me a picture of Ireland's borrowing costs if you wish to avoid such ad hominenmity in the future.
During the period where the left's strategies have been in place, we had far more stability than and less economic disruptions than whenever the right's solutions have been in place. Everytime we have deregulated banks, financial crises have followed soon after. And if it was just about the poor risk takers failing, no one would care. But when their failing affects the rest of the economy, it becomes a national security issue and directly under the purview of the federal government.
TARP was the wrong way to go about it. I've described solutions that involved writing off subprime mortgages made in bad faith somewhat akin to the Iceland situation that may have also worked to stave off present crisis and reduce future risk. If you think FinReg and the watered down Dodd-Frank went anywhere to the core of the problems in the banking system, we'll just have to agree to disagree. As it is, the banks that were too big to fail then are even bigger now, the tri-party repo system is at the moment more or less intact, and the credit rating agencies that were disastrously wrong still wield government-franchised clout. Hell, it took a fight and half just to start an agency to protect consumer financial interests, and that might even be killed. TARP has created more moral hazard than ever. America has always had an "anti-bailout" culture. In fact, the reason why TARP was structured initially as the purchase of troubled assets rather than more effective direct cash injections was due to Republican fears of "nationalization" and Democrat fears of bailouts. Only when s**t hit the fan did these principles get abandoned. You really think market investors believe the Tea Party, of all people, will stop that from happening again if s**t hits the fan again? For years, the assumption of government backing was a bit wishy-washy, now it's tangible and real. The American banking system is a lumbering beast that needs drastic reform and regulation, and the conditions of TARP have made this very difficult, especially since TARP moved in the opposite direction of where banking reform should have went by consolidating banks, and giving them more access to federal money. Even the most ardent TARP fan will tell you its' a temporary fix-it at best, achieved under desperate conditions. TARP was better than doing nothing, and considering the time frame it was an alright solution, but now we're living with the consequences and not doing much to address them.
I could care less about avoiding your attacks, I only wanted to emphasize for your own sake that reading comprehension is essential in appraising arguments, and making counter-arguments. Have a good day!
Agreed, I would content that their property & casualty arm which was rebranded as Chartis temporarily & their life insurance arm American General were and are still extremely solid.
... then we're not communicating. I never said that. I said what we experienced in 2008 was a major recession. I said it was not a complete "economic collapse for everyone but the bankers." A collapse, to most people, would be something like the great depression, but whatever. Semantics. I just wanted to get people to not use hyperbolic language (which is the sad reason I don't know what to trust in the Taibbi piece.)
Actually the only thing I praise W for; more specifically appointing Bernanke and particularly Paulsen. I can't imagine Volcker was popular when the prime rate his 20%, either.
When you find yourself asking what difference one person can make, always look up taxpayer money and see how much of a difference that's making in the world.
i like to imagine that this is the typical and explicit NSFW thought pattern of a Wall Street executive. <iframe width="420" height="315" src="http://www.youtube.com/embed/btiK4aXrK20" frameborder="0" allowfullscreen></iframe> "i got ice in my veins, blood in my eyes, hate in my heart, love in my mind"
Actually, every other arm of AIG besides the now unwound Financial Products division was and is extremely solid. That one division (located in London) brought down the whole company. As far as this law suit goes, AIG never considered suing the government for bailing it out, although that certainly makes a spicy headline! There was a demand from Starr International Company (headed by the former AIG CEO who currently holds the most AIG stock) that AIG either pursue, or allow Starr to pursue, a law suit against the government on behalf of the stockholders. Just yesterday, AIG refused Starr's demand in it's entirety. So no, they're not suing the government. And they never even considered it. Starr did.
Having been off work for two weeks+, I had a lot of catching up to do so am only now responding. My apologies. Not part of the article, but part of the fluff that editors attach to draw people's attention. Nice try even though you know better. I understand on the macro level we call it a recession. Fact is, a lot of people were slammed by the actions of a few. And I trust you and others in this thread will note I did say the following: That in no way suggests I think a total collapse happened or that I don't know the difference between a recession and a depression. What it is meant to convey is a disgust with the comfortable supporters of the status quo who hide behind terms like recession and offer only a perfunctory "too bad, so sad" to the people who truly got screwed. For the guy living with his family in a broken down RV after they lost both jobs and their house, yes, the economy collapsed completely. For the nation as a whole and certainly for bankers who drank furiously from the common well, it did not. Sorry, but there was hysteria: Here's a huge problem. Here's the only way to fix it. Therefore we must fix it this way right now or terrible things will happen. Hysteria. It was like the guy who faints at the sight of blood coming upon a horrific auto accident. "Oh no, I can't see blood. Better cover those people with a tarp. There. That's better." Meanwhile, the people in the wreck may feel warmer under the tarp and may feel good enough to get up and drive the same way down the highway towards another crash, but it didn't address the nature of the injuries and they will bleed out eventually. What I do know about medicine is that you treat the problem and then the symptoms. If that is the case, then why the rush to TARP? Hysteria that prevented fixing a financial system that continues to be both broken and rigged? One of Taibbi's implied points and one that I not surprisingly agree with is that the panic was created so the reform would not take place. If you are a bank, would it go on your books as $1 loaned or would you claim $365 loaned? By the way, here's how Bloomberg responded to Bernanke's memo: Admittedly, some of the news articles grouped loans and other stuff, but the number as Bloomberg reported is a good number... lent, spent, or committed. Nor does it change the money I have received from you. Money I get at very low interest rates and can hold until I make a profit and then repay you. Money I won't use to loan to other people so the economy can recover. Again, the point is not how much money there was, but how it was used, what we thought it was doing, and what it was really doing. It was not used as intended and instead made a bunch of rich people richer while propping up the current financial system. It's way too soon to say whether it worked or not. These things tend to have unintended consequences that pop up years from the time everyone thought the issue was done. That's great that there are more dollars in the Treasury, but you seem to have a binary view of this thing. The important thing is that the system was not changed and remains unstable and is in fact, actively working against the good of the country. What sort of view should I have.? The view from where the cheerleaders sit doesn't seem that great. Good post. Except that is not what I said at all. See above. And really, I'm shocked that most people you know through living in the Bay Area and doing the work you do kept their jobs and kept paying their bills. Did you ever take a ride through Stockton at the height of the crash? Ghost neighborhoods. Exactly. Again, that's not what I said. Said the witnesses against the Scottsboro Boys. You are way too hung up on the figure. The fact that we were lied to, that the funds were not used as they were intended, that we acted out of panic, that we propped up a dysfunctional system and a host of other problems pale in comparison to the absolute number that was loaned by the Fed. Good post. I don't think that is what he said. The Right's desire is to socialize risk. Please. TARP did not create the Tea Party. The Tea Party is and always was the base of the Republican Party, astroturfed into a frenzy by the Repub movers and shakers playing on Obama's election. Huzzah! We agree on something. One could start by not assuming what one poster said another poster said is what the first poster said. And finally: AIG can blow me.
