US To Put Conditions On TARP Repayment

Strong banks will be allowed to repay federal bailout funds, but only if such a move passes a test to determine whether it is in the national economic interest, the Financial Times reported on Sunday, citing a senior U.S. administration official.

The report said banks that had plenty of capital and demonstrated an ability to raise fresh capital from the market should, in principle, be able to repay government funds.

Read the whole story: Reuters

Comments

[cjt1957]

08:28 AM on 04/21/2009

First you force the strong banks to take the money. Then you start making up rules. Then you change those rules. Then you make new rules about paying the money back. Government at its best.

[parrotista]

12:34 PM on 04/21/2009

All of the banks have been glad to take money. Some of them just didn't want the money with strings attached. But all of them have been bailed out directly or indirectly (e.g. the money that went to AIG that they used to pay off some of their debts. Like 12 billion to Goldman Sachs).

You think it's been fair to us that we've given out so much money to these banks and then had so little say-so over how it's spent, whether it's bonuses or executive office suites?

These banks got themselves and all of us into a big mess and the Federal Government had to step up to keep the whole thing from collapsing. Please explain why you have your handkerchief out for them, like they're the victims in all this.

And as far as we know, we haven't changed the rules on them. As far as we know the banks signed a one-sheet document that former Secretary Paulson gave them to sign, terms, conditions, guidelines to follow later. Extraordinary? Of course. Extraordinary circumstances? What do you think? This was a crisis. You care to argue otherwise?

- Craig

[bannorhill]

10:28 PM on 04/20/2009

So first you make the loans. Then you change the rules (if there were any to change).

That sounds a little backwards.

[TJC]

02:20 PM on 04/20/2009

Geithner is doing the right thing here. We need to be careful that banks don't come back for more TARP money after paying back the first amount. They need to be healthy before giving money back. Remember there is more to this crisis. Commercial Real Estate is now hurting and they are huge. They were down the line on getting hurt by the economy but now their tennants are defaulting and the landlords will not be making their mortgage payments to the banks. The banks need someone with a bit more foresight and perhaps some solutions of their own.

[cjt1957]

08:31 AM on 04/21/2009

I always thought paying your debts, the TARP, was what any economy depends on. If they do not need the money, they need to get out from under. Obama is useing the TARP as controll, now that he has a taste for it he will not give it up....

[gbaldy]

01:59 PM on 04/20/2009

Take a look at http://bettertomorrow-holymoly.blogspot.com
It will help you.

Best Regards,

Jerry Baldy

[Kaves]

01:34 PM on 04/20/2009

Oopsie Larry, the filthy commoners are starting to wise up to our insidious plans! Better get a band aid..

[Realityism]

01:02 PM on 04/20/2009

This will be an unpopular opinion, but I believe TARP is becoming ridiculously unfair to banks.

The federal government is effectively circumventing contract law through the legislature. This sends a bad message: Never sign a contract with the government. They can change the terms whenever they choose.

I'm not saying that the conditions themselves are a bad thing. I'm just saying that it's disingenuous at best and criminal at worst to add them after-the-fact. I mean, they could have set these terms up front, and it's not as if it just slipped their minds. They explicitly decided to not add these kinds of terms at the outset because they knew that, given these restrictions, many of the firms now receiving TARP loans would not participate. But the government wanted wide participation.

So they make the TARP program very non-restrictive, get a whole bunch of banks to sign, and THEN pass law that says "Okay, now you have to limit executive pay and meet all these other conditions." So the banks say "Alright, well then here's your money back." So now the government is going to pass a law that says "No, you're not allowed to give the money back."

I've got no love for these banks, but the TARP program has turned into one big bait-and-switch scam. If we didn't harbor such fondness for our President and rage against banks, we would never tolerate this behavior from our government.

[TJC]

02:09 PM on 04/20/2009

Your post is not necessarily an unpopular opinion but perhaps forgetting the loss of trust everyone has in letting the banking/lending and Wall Street markets self regulate. There are measures of trust required after getting slappen in the face with irresponsibility. And then the back-hand to the American public when they distributed huge non-performance based bonuses. The government steped in at the request of the Banks. Bush and Company failed to set rules at the time of the TARP distribution and did a quick hand-off to Obama. As circumstances change, so does the game. This is like dealing with your in-laws...you must lay this down gently and fully understand the consequesces.

[Realityism]

03:10 PM on 04/20/2009

I think that to blame the lack of TARP restrictions and oversight on Bush is a mistake, not because his administration is blameless, but because it conveniently lays all of the responsibility on an executive administration that has since departed.

We still have largely the same Congress as when TARP originally passed, and they laid the groundwork for a bait-and-switch which they have been faithfully executing ever since. You don't set up contracts based on trust. If you were supposed to merely trust the other party, there would be no contracts. Either they didn't realize it would come to this out of sheer stupidity, or they've been planning to circumvent the terms all along.

Congress has presented the country with a Catch-22. On the one hand, they've signed a bad contract, and they should have to abide by it just like everyone else. On the other hand, that's OUR money.

I favor a "compromise" of sorts. Keep the pay limits, etc. in place, but let banks pay the money back if they don't like it. However, begin threatening to put unhealthy banks into receivership to be dismantled and auctioned off, and make it known that banks who pay back their TARP loans early will be the first ones evaluated.

[cjt1957]

08:33 AM on 04/21/2009

Obama was consulted by Bush on what was going on. By the way, Bush is no longer in office....

[parrotista]

09:23 PM on 04/20/2009

I understand that you're worried about the appearance of fairness but let me raise a couple points:

1) I could be wrong but I don't think any of us know exactly what the terms of the agreement were. I suspect that the government left open the option of imposing any number of conditions on the banks. Why suppose otherwise - after all we know a few banks at least didn't even want to take the money. But they were given an offer they couldn't refuse.

2) This is an extraordinary situation, yes. But extraordinary times sometimes call for extraordinary actions. Let's not get out the hankies for the banks. They got themselves and all of us in a huge mess and it has taken extraordinary actions by the Federal government to keep things from utterly melting down. The banks have been thrown a lot of lifelines and most of them were without any strings attached, without any guarantees that the government and the people it represents would get back what they're on the hook for, without the power to step in and stop things like the AIG bonuses.

So why the big boo-hoo for the banks?

- Craig

[chocolatecity]

10:47 AM on 04/20/2009

This is the right thing to do. It makes sure that banks are paying the money back because they are healthy enough to go with out. This will prevent executives from hamstringing their companies just to protect excessive pay and bonuses. Wise decision.

[parrotista]

11:25 AM on 04/20/2009

Bad decision. Why pull out the hankies over the banks? Why weep over their being "hamstrung" They should be hamstrung, and there should be a lot more regulations to hamstring them.

The banks owe us, the people, the Family. And they owe us big-time. They got us all into a big mess and the Godfather, the Federal Government, came through for them. It is insulting for these banks to pretend, now that the crisis of the moment is over, that they don't owe us anymore by simply paying back the Treasury. That's not how it works.

- Craig

[THEMAC118]

01:01 PM on 04/20/2009

THE BANKS SHOULD BE REQUIRED TO REPAY ITS LOANS to THE F D I C BEFORE IT REPAYS TARP .

WHEN WILL WE BEGIN to SEE " PERP WALKS" ? ? ?

RATING AGENCY PROFESSIONALS WHO APPROVED INVESTMENT GRADE RATING SHOULD BE FIRST TO BE ARRESTED , FOLLOWED BY MORTGAGE BROKERS and INVESTMENT BANKERS WHO FRAUDULENT PACKAGED THESE "SECURITIZATIONS" .

THE ONLY REASON THE MARKET HAS BEEN UP THE LAST FEW WEEKS IS THAT MARKET INVESTORS , with C N B C DOING THE CHEERLEADING , ARE FULLY AWARE THAT THE GOAL TO SHIFT "LOSSES" ONTO THE UNSUSPECTING PUBLIC IS CLOSE TO BEING REALIZED .

[Kaves]

01:31 PM on 04/20/2009

wurd.

[higgins1990]

06:15 AM on 04/20/2009

Why was Geithner touted as indispensable? Could anyone remind me? Anyone? Hello?

[000Jade000]

01:23 AM on 04/20/2009

How is it proposed that we get back the billions that were funneled through AIG? Will the recipients pay us back, will AIG, or will nobody?!

[parrotista]

11:27 AM on 04/20/2009

Exactly. Notice that the banks only want to pay back the money that came with strings attached. The other money they're perfectly happy to keep.

- Craig

[PhilipTaylor]

01:10 AM on 04/20/2009

Geithner Stress Tests=useless against “NO FILES” clueless Derivatives=No Accessed Value

FBI warned 2004 ="Epidemic" of mortgage fraud and lenders initiated 80% of these Frauds
FBI Warning 2004=Early enough to averted CRISIS if Bush acted=Mortgage Fraud Epidemic
Banksters=legitimate businesses but "weap0n" to use “Control Fraud"
Banksters="Organization as 'Weap0n' in White Collar Crime." Wheeler&Rothman
Banksters=“Best Way to Rob a Bank is to Own One.” Black
Banksters=Control frauds weap0n of choice is accounting
Banksters=Control frauds=greatest financial losses of any property crimes
Control Fraud=Financial DeRegulation/DeSupervision/Perverse Compensation Systems!
Banksters=Purchased nonprime loans, Pooled into Derivatives, and sold as AAA
Banksters=Defrauded Buyers of Derivatives as Risk Free=Blatant L I E=Toxic loans
Banksters=Even pooled "L iar's loans" with AAA ratings despite FBI warnings
Banksters=optimized accounting fraud but destroyed Bank with retained Toxic paper.
Banksters=No vital nonprime loan files so Nothing known about Owned Derivatives.
Criminogenic Environment=“Big Money Crime” Calavita, Pontell&Tillman
FAKE Book Profits=Fake Accounting to "earn" bonuses and Hide Losses!
Senior Manager=Tells Credit Rater "Totally UNREASONABLE" to view loans in Derivatives
Senior Manager= Must rate without knowing contents of derivatives
Fraud=principal credit risk of nonprime mortgage lending=requires sample loan files
Fraud=Most large investors did not review the loan files before purchasing nonprime loans
Ratings Agencies=NO review of sample loan files before AAA ratings derivatives.
"AAA" Rating=indicates “NO Credit Risk”=safe US Government Bonds
Ratings Agency Lucrative Profits=Gave AAA ratings to derivatives with staggering risk
Ratings Agencies=Blind Eye to fraud=Attain Massive Profits.
Accurate Small Sample of Nonprime Loans=Reveal Toxic Waste&Accounting Fraud.

[PhilipTaylor]

11:34 PM on 04/19/2009

This is a CLEVER WAY for Geithner to remove the "PRE-PAYMENT PENALTIES" for Wall Street Banksters on TARP!

They REMOVE the TRAPS for Wall Street but those on MAIN STREET can "Forget-About-It" you have to lose your HOME!

[PhilipTaylor]

11:47 PM on 04/19/2009

Pre-Payment is a 15% reduction in warrants value!

[fisharefreinds]

11:15 PM on 04/19/2009

Oh please get rid of this man. He is a Golem!
He believes in NO regulation and no laws that curtail banks or monetary policy and he said that with pure contempt to those questioning him at his senate hearings. He is from the same school as Bernacke and Greenspan. He will melt this country and that is what he is out to do. He is Paulson with a better resume. As long as he is at Treasury there will never be an investigation into the way we got here, no discussion on who to hold accountable, and NO laws to change and stop this from ever happening again. All that Roosevelt accomplished has been wiped out by the same people and same insane economics that got us here in the 20's. Get rid of this man.

[Rule Of Law]

04:06 PM on 04/20/2009

You mean he's that guy from the Lord of the Rings? :)

[fisharefreinds]

12:05 PM on 04/21/2009

Yep. so

[d00derman]

11:09 PM on 04/19/2009

Unfortunate title to a well thought out process.