Tag: TARPs

Taxpayers Pay To Help Banks Expand

I realize that the American people are worried and a bit perplexed over the bailout and how it is going to this point.  But there has got to be a line drawn of where our money is spent.  I am still dead set against using my money to help a bank acquire more holdings.

Bank of America Corp (BAC.N) will receive $20 billion in fresh government investments and a federal backstop against $118 billion of bad assets it holds to help it absorb Merrill Lynch & Co, U.S. officials said on Friday.

As part of an emergency plan announced by the Treasury Department, the Federal Reserve and Federal Deposit Insurance Corp, Treasury will provide Bank of America, the largest U.S. bank by assets, with $20 billion in fresh capital from a government bailout fund in exchange for preferred stock.

The government also agreed to share in losses on the troubled assets, which Bank of America took on when it paid an estimated $19.4 billion for Merrill on Jan. 1.

With the financial system foundering under a mountain of bad mortgage-related debt, officials feared a deteriorating capital base at Bank of America, which has already received $25 billion from the government, posed a risk to the financial system as a whole.

Sorry but this story just pisses me off…….We are payiung a bank to assume the debt and problems of another entity.  Where is this good business practice?  Where is this wise use of the taxpayers money?

Any thoughts?  Please share.

TARP Application

TARP, the Troubled Assets Recovery Plan, legal-ese for the “Bailout”.  If you have ever filled out a loan application, was it ever easy?

My last major purchase I had to promise to give them a quart of blood or my first male born.  In other words it was a trying and complicated ordeal.  But the group that fleeced the American taxpayer out of billions had it much easier than “Joe Sixpack” has ever had it.  When will the American people wake up and smell the damn coffee?

Below is the application that an institution needs to fill out to receive billions of dollars of taxpayer money.  There is more paperwork to buy a TV than to get billions.  Why is that?

Please complete the following information and follow the submission instructions as described
on your Federal banking agency’s website. In addition to completing the information on this
form, please provide a description of any mergers, acquisitions, or other capital raisings that are
currently pending or are under negotiation and the expected consummation date (no longer than
1 page).
In the event the applicant files an application with the appropriate Federal banking agency
prior to the availability of the investment agreement, the applicant must file an amended
application which includes updated responses to any items in the application that required prior
review of the investment agreement.
Institution Name:

Address of Institution:

Primary Contact Name:
Primary Contact Phone Number:
Primary Contact Fax Number:
Primary Contact Email Address:
Secondary Contact Name:

Secondary Contact Phone Number:

Secondary Contact Fax Number:
Secondary Contact Email Address:

Page 2

RSSD, Holding Company Docket
Number and / or FDIC Certificate
Number, As Relevant:
Amount of Preferred Shares
Requested:
Amount Of Institution’s Authorized
But Unissued Preferred Stock
Available For Purchase:
Amount Of Institution’s Authorized
But Unissued Common Stock:
Amount Of Total Risk-Weighted
Assets As Reported On The
Holding Company’s Or Applicable
Institution’s Most Recent FR-Y9,
Call Report, Or TFR, As Relevant:
Institution Has Reviewed The
Investment Agreements And
Related Documentation On
Treasury’s Website (Yes/No):

Describe Any Condition, Including
A Representation Or Warranty,
Contained In The Investment
Agreements And Related
Documentation, The Institution
Believes it Cannot ComplyWith By
November 14, 2008 And Provide A
Timeline For Reaching
Compliance1:
Type of Company2:
Signature of Chief Executive
Officer (or Authorized Designee):
Date of Signature:

You mean NOTHING to the people in charge!  You are their cash cow.  Is it not about time to get angry?  You wanted change and you got screwed!  Smile!  It ain’t over yet, but the next time bring your vasoline, maybe it will not hurt so bad.

Which Way To Throw The Cash?

It began as a taxpayer-financed fund to buy so-called toxic assets, shifted to one that injects capital into distressed banks, and is now veering toward propping up ailing U.S. automakers.

The $700 billion bailout fund administered by the Treasury Department has changed direction roughly in tandem with the economy’s deepening woes.

When it was first conceived, Treasury Secretary Henry Paulson said the fund would be used to buy unwanted or failing assets from financial institutions in a bid to clear the way for lenders to make more loans and loosen a credit crunch.

The sheer mechanics of setting up an operation inside Treasury to evaluate questionable assets that lenders might want to sell guaranteed a slow process, so by mid-November that tack had changed to stress putting capital into banks to ensure they had funds that, hopefully, they would lend.

While he, Paulson,  warned of the economic harm that could come if a major automaker failed, he argued the Treasury-run program was meant only to stabilize the financial sector.

But that apparently changed when the Senate balked at a bailout on Thursday night and the White House said funds from the financial bailout program might have to be used — another change in direction.

Out of the initial $350 billion Treasury has drawn down, only $15 billion is still uncommitted, although Paulson could redirect billions more he had pledged to pump into banks.

Looks like Paulson is not too thrilled with the prospect of helping workers, but he may have no choice in the end.

What Happened To The Toxic Loan Plan?

Treasury Secretary Henry M. Paulson’s decision to abandon plans to buy troubled bank assets shows that he has come to two conclusions about what was once the chief focus of the government’s $700-billion bailout:

The first is that it wouldn’t work. The second is that the economists and financial experts who agitated to have capital injected directly into the banking system now appear to have been right all along.

Paulson announced Wednesday that the federal government would formally abandon plans to buy troubled mortgage-backed securities from banks and other big investors to instead focus its efforts on thawing credit markets.

The shift, however, had been in place since last month. A week after the package was passed by Congress on Oct. 3, Paulson began signaling that the thrust had changed and that much of the $700 billion instead would go toward providing capital to banks by investing in their preferred shares.

That action might be compared to replacing a gravely ill patient’s slow intravenous drip with a shot of adrenaline into the heart. The stock market rallied, and over the next few weeks the capital injections intensified and talk of the asset purchases ebbed.

Although Treasury’s change of course has aligned the U.S. more closely with Britain and continental Europe, where direct recapitalization of banks has become the standard response to the financial crisis, it has raised new doubts about the U.S. bailout.

These include concerns about Paulson’s inconsistent direction. The Treasury secretary originally presented the plan to buy toxic mortgage-based investments under the Troubled Asset Relief Program as the only conceivable solution to bank failures, then vehemently resisted congressional attempts at modification.

“This was a major piece of legislation,” observed Campbell R. Harvey, professor of international business at Duke University. “TARP was what people were voting on, and now he announces that TARP is not going to be TARP.”

Another concern is that Paulson and Congress are failing to specifically define the purpose of TARP. Originally the program was aimed at troubled banks, particularly those whose failure might undermine the domestic or global financial systems.

On Wednesday, however, Paulson said the remaining TARP funds would be directed at “both banks and non-banks” with troubled holdings; at non-bank credit markets that have stagnated, such as those for credit card receivables, auto loans and student loans; and at the housing market to stem the risk of foreclosure. These categories represent a dramatic expansion, and arguably a dilution, of the program.

Well, how nice this change seems to be a weekly thing…the money will go where the corporations want it to go.  What of oversight?  There is NO oversight!  Paulson does what Paulson wants and NO ONE is questioning his decisions.  Where were the critics in the run to the bill.  The bill that just had to be passed was to stop the economy from tanking….and the economy tanked….someone ask these people why we should trust them to get it right this time.