TARP money is being distributed to banks as we speak, and more is on the way.
Sounds like a plan, right?
Anyone want to borrow money at 10-12%?
…when Treasuries are in the tank?
Didn’t think so.
But Obama wants to force banks to lend these dollars.
The $350 billion second half of the federal government bank bailout—aka TARP (Troubled Asset Relief Program)—funding was released by the Senate. According to the Wall Street Journal, President-elect Barack Obama intends to “spend $50 billion to $100 billion on a ‘sweeping’ foreclosure-prevention effort” as well as “impose tougher restrictions on banks that receive government aid, including requirements on banks to lend money, increased restrictions on executive compensation and curtailed dividend payments for some firms.”
The spankings will continue until moral improves.
Forcing banks to lend money…hmmm. Sound familiar?
C.R.A. anyone? That worked well for the economy didn’t it Mr. Jimmy?
TARP money costs banks 8-9%; it’s debt that shows up on their books as an “asset.”
Huh?
To make money, banks need to lend it out somewhere north of what it costs them, to make what we here in the real world call a profit.
As such, the good banks want nothing to do with TARP money and are simply waiting for the banks that took it or are otherwise soon to be insolvent, and then take advantage.
As they say, assets return to their rightful owners. Capitalism will prevail until liberals extinguish it’s last breath.
Now you know why TARP has done nothing to free up credit and get banks lending again.
…and why government intervention in a free market is almost always a bad idea.
This sounds a bit like the failed HUD “Hope for Homeowners” mortgage bailout/refi plan. It was hobbled together buy congress and the banks, so the public treasury is protected and the banks are protected. All the pain was shifted onto the individual who wants to get out of their expensive mortgage, hence the very people who are the target of the program — and who must volunteer to its terms in order for the program to be a success — don’t want anything to do with it.
10 to 12% will look like a bargin in 4 years if we keep passing bailouts.