TARP Failures Keep Taxpayers On The Hook; 33 Companies Miss Payment

According to The Washington Post, 33 companies that received a portion of TARP's $700 billion have not paid the federal government their most recent dividend payments. Those payments are required by the terms of the bailout and signal that the firms are strained for cash, according to the Post.

If those companies fail, US taxpayers stand to lose billions.

The Post profiles CIT's failure and bankruptcy despite $2.3 billion in investments from the federal government, money that US taxpayers will likely never see (though Goldman Sachs, another CIT investor, stands to make $1 billion from the company's failure). CIT's bankruptcy filings listed $71 billion in assets and $64.6 billion in debt.

The Fed deemed CIT to be a bank holding company in December 2008, allowing CIT to borrow from TARP. The Fed argued that allowing CIT to borrow TARP funds would help the public because the lender would be free to loan more--except that never happened.

In the fiscal year ending on Sept. 30, CIT made just 142 loans backed by the Small Business Administration totaling $105 million. One year before, CIT lent 1,589 SBA loans totaling $873 million.

In July, Reuters reported that CIT's troubles raise questions about the Fed's supervision. Just weeks after the Fed's decision that allowed CIT to borrow TARP funds, the FDIC turned down a request to guarantee CIT debt. The FDIC was worried about "CIT's higher risk lending, escalating bad loans, and limited capacity for new lending."

Alan S. Blinder, the former Fed vice chairman under President Clinton, argues that the decision to bailout CIT was the weakest. Washington Post:

"Of all the financial companies that were rescued or semi-rescued, CIT was always the thinnest case, the toughest to defend," he said. "My attitude was: Hold your nose and go for it. It's something that I would rather not have seen the government do. . . . But the Fed and the Treasury and the others were in the unenviable position of being like the Dutch boy with the finger in the dike. And we definitely didn't want the dike to burst."

On the day that news broke about CIT's bankruptcy filing, The New York Times' Gretchen Morgenson wondered if CitiGroup, another bailed out institution, could "carry its own weight." In just 80 years, the federal government has bailed out CitiGroup four times. Citigroup has ominously been called "the queen of the zombie dance," by Chris Whalen, editor of the Institutional Risk Analyst. There are doubts that CitiGroup can survive, even after its most recent $45 billion federal bailout. Whalen in the Times:

"They are hoping that a combination of bank assistance and maximizing revenue and buying time will let them survive," he said. "When I look at the whole picture, Citigroup is in the process of resolution. I continue to believe the equity is worth zero and that the company will have to go to bondholders for some kind of money to make the bank stable."

Comments

[CPR]

Sounds like a late fee should be assessed to their accounts. Or have the bill collectors start calling them at home/office/family members and report it on their credit report where it will stay for 7 years.

Why are they being treated so differently than any other borrower?

[drhirise]

These too big to fail institutions are on the verge of collapsing on themselves. Most of the banks are broke already, and that would be obvious if they accurately valued all the toxic underwater loans on their books. They can't push around paper forever, and our economy is going nowhere until they stop... the only problem is... when they do stop the paper pushing games, the entire financial system is going to come crashing down! Ashes to ashes, dust to dust.

[JavaManiac]

wilsonveteran

It is a myth that every other country does health care better than us. It is a myth that citizens in those countries like their health care. Canada has already stated their health care system is unsustainable. Britian is having problems with theirs. All these other countries have far lower survival rates for cancer why is that.

__________­__________­__________­_____

Wilson - you responded to a comment I made earlier - how do you know it is a myth - how many of these countries have you lived in??? I have lived in 3 (England, Italy, and Japan) - and I can tell you hands down I would get as good if not better health care there)

People live longer in Italy and they smile more and eat way better than Americans. They walk more - laugh more - dance more - and they pay for basic doctor appointments based on how much they earn (tax return rate). Everyone has major medical -. and meds are cheap - cheap cheap!

UK - my hubby broke his neck in a car accident there - and as awful as it was - it was absolutely stress free medical experience - no paperwork - no bill -. all the same tests as the US - specialists all covered - follow up care all covered - prescriptions 3 months covered after that 5 GBP per script.

Japan - clean - organized - healthy - they do healthcare better than they do cars!

So don't tell

[chedet]

Why are the conservatives obsessed with the cancer survival rate anyway? It doesn't mean much does it if our life expectancy is lower than any other developed countries or our infant mortality rates are higher than these countries? Are they assuming that everybody will get cancer at some point of their lives?

Wilsonveteran is an idiot. Why just take the cancer survival rate? If he wants to make a good argument, then why didn't he include life expectancy or the infant mortality rates? Did he see where we stand in the WHO healthcare ranking? Or he just conveniently leave out that facts because it's just to ugly to see.

[chedet]

Why are the conservatives obsessed with the cancer survival rate anyway? It doesn't mean much does it if our life expectancy is lower than any other developed countries or our infant mortality rates are higher than these countries? Are they assuming that everybody will get cancer at some point of their lives?

Wilsonveteran is an idiot. Why just take the cancer survival rate? If he wants to make a good argument, then why didn't he include life expectancy or the infant mortality rates? Did he see where we stand in the WHO healthcare ranking? Or he just conveniently leave out that facts because it's just to ugly to see

[dnegri]

As one who has lived in both France and the Netherlands, my reaction is that it is Wilson who is
promulgating myths. For starters, he needs to get some objective information about what he claims.
For starters, public opinion in European countries, Japan, Taiwan strongly support their respective systems. The proof? Not a single major politician or party in any of those country has run on opposition to the their HC system.

And Wilson's biggest myth concerns money. Considering we spend twice the per capita amount on health care (covering much less of our population) than these other countries, if we just halved the difference between us and them and they spent that additional money, they'd show remarkable
improvements in already good systems. In other words, their system is just fine. Unlike ours.

It's evident Wilson hasn't taken the time to red T.R. Reid's excellent book either.

[Stop Wall Street]

Obama's job creation programs have been ineffective

hat tip to: http://financeopinionss.blogspot.com

The only beneficiaries of this 'v shaped' recovery are the bankers, fund managers, and rest of the top 1%

[dnegri]

If you factor in authentically saved jobs, it has has a positive impact. The problem is that Obama didn't use all the stimulus money for immmediate job creation efforts. Rightly or wrongly. And, of course, Dems gave Repubs their cherished and ineffective tax cuts as part of the stimulus.

[dfranz]

As Bush did with every decision the TARP decision was made as a knee jerk reaction, with no planning and no oversight. His only concern was keeping his buddies who would donate to his "Library" in business.

He's luckey he didn't break his chin with the convulsion.

[OLJW00]

Which Obama voted for - just saying.

[givesflack]

8 years of Bush policy and 30 years of republican ideas created this mess- just saying.

[holeybuybull]

TARP legislation was passed by a Democratically controlled Congress, wasn't it? Just another example of the bankruptcy of the concept of "partisanship". Where's Paulson?

[givesflack]

Paulson and every other Republican and Libertarian are hiding behind Democrats hoping they get the blame for GOP concepts and governing...

[dnegri]

YOu're oversimplifying. The TARP was the end result of nearly a year of frantic scrambling to come up with ways to halt the financial meltdown. There are a couple of excellent books out there by now which have looked at this period of time. The one I've about finished is "To Big To Fail" by Andrew Sorkin. Very interesting and informative.

[cyrano1]

We've been here before!

Huey P Long, governor/senator of Louisiana; From his 1934 speech on the benefits of his "Share the Wealth" program. An alternative to the "New Deal".

http://130.18.140.19/stennis/longsharethewealth.html

[givesflack]

The whole ill_egal Bush residency in th_eft was to bring down government from the
inside, why were these corporate figures so eager to pay his November co_up
d'et_at American style by inserting him into office? and no legitimate
recount, Rove style? Paulson deliberately emptied
every dollar he could find in the treasury and lent it out at 0% with no
strings attached and to anybody who would take it even forcing many to take it
if they didn't need it. Try and convince me otherwise. Yeh, the removal of
money from government meant to cripple it by putting the bankruptcy on the public trust
not big banks of who manufactured crisis(Gra mm-Leach.. .) . And who stands to win when CIT goes down but other banks that are their creditors. This was planned too well and every motivation of Bushes was to make it impossible for the government to run for years if ever again. Obama
won because the populace understood the first part, that Bush SU_CKS but don't
understand the larger implications of these devi_ous actions, the media manipulates
people to vote SLOP/GOPpy because their too selfish to wait for results of the
Democrat majority to correct this As_sho_les dirty work. They are
pressuring OHB in only his first year to provide impossible miracles. And Bush knew Iraq was a
mistake(more money lo$t)- he's too misc_hievous not to know. GIVE ME A BREAK
MAN, GIVE ME A BREAK....

[hellboundtrain]

Diabolical and evil, their duplicity and the extent to which they would go for more money knows no bounds.

Have you ever had the nightmare that which you held as good, was in actuality the the greatest evil, whose sole purpose was to work to assure you, your families', your country's demise?

[hellboundtrain]

It occurs how to solve the employment problem:

We must all be taught the nuances of writing the derivative & swap contracts. We can write them for each other!

Voila! Full employment! And, we get to create more money!

[Jond0]

Cap 'n' Trade?

[givesflack]

The whole ill_egal Bush residency in th_eft was to bring down government from the
inside, why were these corporate figures so eager to pay his November co_up
d'et_at American style by inserting him into office? and no legitimate
recount, Rove style? Paulson deliberately emptied
every dollar he could find in the treasury and lent it out at 0% with no
strings attached and to anybody who would take it even forcing many to take it
if they didn't need it. Try and convince me otherwise. Yeh,this was to remove the
money from government by crippling it by putting the bankruptcy on the public trust and
not big banks of the manufactured crisis(Gra­mm-Leach..­.) . And who stands to win when CIT goes down but other banks that are their creditors. This was planned too well and every motivation of Bushes was to make it impossible for the government to run for years if ever again. Obama
won because the populace understood the first part, that Bush SU_CKS but don't
understand the larger implications of these devi_ous actions, the media manipulates
people to vote SLOP/GOPpy because their too selfish to wait for results of the
Democrat majority to correct this As_sho_les dirty work. They are
pressuring OHB in only his first year to provide impossible miracles. And Bush knew Iraq was a
mistake(more money lo$t)- he's too misc_hievous not to know. GIVE ME A BREAK
MAN, GIVE ME A BREAK.....

[jws2346]

I hate to be reminded, how's it feel to be a big ole' Tuna?

[shakabra]

"CIT's bankruptcy filings listed $71 billion in assets and $64.6 billion in debt."

Can someone explain why CIT can't pay back the $2.3 billion TARP money when they have $7 billion more assets than debt?

[dnegri]

Because when a financial institution lists its "assets", that covers a variety of things, including "money" that is tied up with other institutions.

[hellboundtrain]

President Obama:
As an American with deep family roots in military service to our country, I demand that the banks that return the TARP funds that they were lent late be charged 29% interest for a late fee, until paid. If the funds are not being paid back, then nationalize those banks with no delay.

Regards,
A Patriot

Message to be e-mailed to the President this morning.

[HacunaMatata101]

Amen, Hellboundtrain. Late fees and interest charges for these companies!

[northstar11]

a fish hook would have reflected reality better.---a little fish hook

[Trustandalwaysverify]

PhilipTaylor I'm a Fan of PhilipTaylor I'm a fan of this user 871 fans permalink Time-line: Bush-Wall Street Corrupt Housing Crisis
2002=Video: Younger Bush Pushing "EASY Loans" on Minorities


That list should start much earlier

Architects of Ruin
by Peter Schweizer

"...In the Clinton years, a new generation of liberal technocrats came to power in Washington and on Wall Street. Schweizer describes how a powerful phalanx of elite liberals, including Bill Clinton, Robert Rubin, Andrew Cuomo, Barney Frank, Chris Dodd, Janet Reno, Deval Patrick, Henry Cisneros, Barack Obama, Nancy Pelosi, Ted Kennedy, Charles Schumer, and many others, aggressively pushed banks to make trillions of dollars in loans to individuals who should never have received them.

Meanwhile, Clinton forged a new form of state capitalism in which the big Wall Street financial companies were repeatedly bailed out—with their profits intact—from a series of costly errors, leading them to take ever larger risks. Both financial policies had profoundly distorting effects. The result was the bursting of twin bubbles in mortgages and mortgage-backed derivatives, in turn leading to a global economic collapse.

... For today, the very same people who planted the seeds of the collapse are back in Washington....."

[givesflack]

Meant to say..If you trust Peter Schweizer...

[dnegri]

Can anyone say, "Ronald Reagan"? That's where it starts.

[poco767c]

New main

[monicaangela]

Yeah !! I think, I'll have to see what it's about first...be back in a minute. 0 ;-)