I could have written this script last fall – every page of it – if I new that President Obama was going to win the election. There was always going to be strings attached to Troubled Asset Relief Program (TARP ) money that flowed into the private banking system, but it was assumed that when the banks had the funds to “pay back” the government, they would do just that.
It’s looking more like the Obama administration likes the control it’s weilding, and may refuse to take some of the funds back.
Last week, a few small banks did return funds to the Treasury. My guess is that it’s not because they wouldn’t like to have a few million extra available to do business…
“We don’t want to be touched by the stigma attached to firms that had taken money,” said Scott A. Shay, the chairman of Signature Bank. He said he also worried that the conditions on the aid could hurt the way he paid bankers and sales representatives.
In February, Bank of America made a $402 million payment to the government to start paying back the $45 billion it received late last year and earlier this year. In March, Chief Executive Ken Lewis publicly noted BoA would pay the money back by the end of the year. Then, Lewis met with Obama.
Now, Lewis says that they will pay back the money eventually.
From Stuart Varney’s opinion piece in the Wall Street Journal yesterday…
Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.
Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He’s been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with “adverse” consequences if its chairman persists. That’s politics talking, not economics.
Could this bank be Bank of America?
I’m not 100 percent certain that Obama is a socialist, but his actions – including government providing car warranties to GM customers – certainly seem to be socialist.