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Should banks be allowed to repay TARP if they want to?

Should banks be allowed to repay TARP funds NOW?

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Harshaw

Harshaw

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The context, of course, is that TARP came with a lot of unexpected and after-the-fact strings -- i.e., government control of executive pay and other company governance.

Some banks were asked to take TARP funds when they didn't want them.

So now, a number of banks are saying they're ready to give back the TARP funds, understandably not wanting government to have the control that comes with it . . .

And the government claims it wants to get out of controlling the banks as quickly as possible . . .

Yet the Treasury isn't allowing the TARP funds to be repaid, at least in many cases.

So, should they be allowed to pay it back, or not?
 
The reasoning behind the denial of refunding is that the government is fully aware of the implications of its policies, and knows that in the near future the crisis is going to get much worse. TARP was enacted for its twofold purpose of assisting the banks while also gaining control in preparation for the crisis that is coming. Allowing banks to get out of that control would be counterproductive for the government.
 
Harshaw said:
The context, of course, is that TARP came with a lot of unexpected and after-the-fact strings -- i.e., government control of executive pay and other company governance.

Some banks were asked to take TARP funds when they didn't want them.

So now, a number of banks are saying they're ready to give back the TARP funds, understandably not wanting government to have the control that comes with it . . .

And the government claims it wants to get out of controlling the banks as quickly as possible . . .

Yet the Treasury isn't allowing the TARP funds to be repaid, at least in many cases.

So, should they be allowed to pay it back, or not?
Click to expand...
Does the TARP legislation have a no-early repayment clause, or one that penalized early payment?
No?
Then yes, they should be able to do so. No question.
 
Khayembii Communique said:
The reasoning behind the denial of refunding is that the government is fully aware of the implications of its policies, and knows that in the near future the crisis is going to get much worse. TARP was enacted for its twofold purpose of assisting the banks while also gaining control in preparation for the crisis that is coming. Allowing banks to get out of that control would be counterproductive for the government.
Click to expand...

At least you're honest about it. I agree. The government does not want to give up control.

Palpatine1.jpg
 
Hmmm....I don't see anywhere in the Constitution authorizing the government to control banks.

Since there's also nothing in the Constitution authorizing TARP, the sooner those "loans" are paid back and off the books, the better it will be.
 
Scarecrow Akhbar said:
Hmmm....I don't see anywhere in the Constitution authorizing the government to control banks.
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Which is exactly why the government doesn't want them to give the money back - the banks are then out from under government control.
 
And guess what? If they can keep moving the goalposts, they'll NEVER have to be out of the government's control!

Some people, of course, will applaud that very loudly.
 
Harshaw said:
The context, of course, is that TARP came with a lot of unexpected and after-the-fact strings --
Click to expand...

Wow that is one heck of a strawman. The government does have a vested interest in seeing that the money it prints is actually worth something and also considering the FDIC backs up deposits no the banks should not be able to pay back at a whim. They need to prove solvency before hand.
 
winston53660 said:
Wow that is one heck of a strawman. The government does have a vested interest in seeing that the money it prints is actually worth something and also considering the FDIC backs up deposits no the banks should not be able to pay back at a whim. They need to prove solvency before hand.
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Geithner Weighs Bank Repayments - WSJ.com

WASHINGTON -- Treasury Secretary Timothy Geithner indicated that the health of individual banks won't be the sole criterion for whether financial firms will be allowed to repay bailout funds, a position that might complicate their efforts to give back the cash.
Click to expand...
 
winston53660 said:
The government does have a vested interest in seeing that the money it prints is actually worth something....
Click to expand...
Then it needs to stop printing it.

and also considering the FDIC backs up deposits no the banks should not be able to pay back at a whim.
Click to expand...
What makes you think the banks that re looking to pay the $ back are insolvent?
If they are solvent, what is your argument for not letting them pay it back?
 
and also considering the FDIC backs up deposits no the banks should not be able to pay back at a whim.
Click to expand...

Now-needy FDIC collected little in premiums
WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.

...

As of Dec. 31, the FDIC had $18.9 billion in its insurance fund - down from $52.4 billion a year earlier - in addition to $22 billion that it has set aside for pending bank failures. The agency has projected it will need $65 billion to take over failed banks through 2013.

But if the FDIC suddenly had to take over a giant bank such as Citigroup or Bank of America, the fund would be drained "in a flash," said Cornelius Hurley, director of the Boston University law school's Morin Center for Banking and Financial Law.
Now-needy FDIC collected few premiums from banks for decade - The Boston Globe
 
winston53660 said:
Wow that is one heck of a strawman.
Click to expand...

How is it a strawman? When TARP was handed out, the executive pay caps and other restrictions were not in place or even talked about. Those came about only after the money had been taken.

So, now, some banks who think they're OK want out from under it.
 
When I loan someone money, I'm usually thrilled to get it back ahead of schedule.

Of course, being a successful businessman and possessed of a firm understanding of finance and how money actually works, I use a slightly different set of economic theories than the rambling delusions of Dear Leader, Tiny Tim, and the cheerleader from Goldman Sachs, Larry Summers.

It's called capitalism. Something they either have never heard of or refuse to believe in.
 
winston53660 said:
Wow that is one heck of a strawman. The government does have a vested interest in seeing that the money it prints is actually worth something and also considering the FDIC backs up deposits no the banks should not be able to pay back at a whim. They need to prove solvency before hand.
Click to expand...

If the government wants to make sure the money it prints is worth something, the ideal solution would be to STOP PRINTING
 
Harshaw said:
WASHINGTON -- Treasury Secretary Timothy Geithner indicated that the health of individual banks won't be the sole criterion for whether financial firms will be allowed to repay bailout funds, a position that might complicate their efforts to give back the cash.
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They may not be "allowed" to repay a loan?

That has the be the most bizarre concept I've ever heard.

Just because a bank is healthy it may not be allowed to pay the money back.

No, that's still extremely wierd.

Will Tax Cheat Geithner allow sick banks to repay the money, instead?
 
Scarecrow Akhbar said:
They may not be "allowed" to repay a loan?

That has the be the most bizarre concept I've ever heard
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Pffft banks have been charging for early repayments for as long as I can remember. Why shouldn't the people who actually back up the money do the same?
 
winston53660 said:
Pffft banks have been charging for early repayments for as long as I can remember. Why shouldn't the people who actually back up the money do the same?
Click to expand...

Hello? I didn't say anything about an early repayment fee, though why the government, a non-profit entity, right? would want to impose one is mysterious enough.

Nope, the Tax Cheat is saying he doesn't want the money back, now that he has control of the banks.

Where in the Constitution is the government allowed to nationalize banks? (or make loans to them?)
 
Scarecrow Akhbar said:
Hmmm....I don't see anywhere in the Constitution authorizing the government to control banks.

Since there's also nothing in the Constitution authorizing TARP, the sooner those "loans" are paid back and off the books, the better it will be.
Click to expand...
Hell the laundry list of unconstitutional acts by the federal govt is endless. :roll:
 
If the government wants to make sure the money it prints is worth something, the ideal solution would be to STOP PRINTING
Click to expand...

It needs to print money to purchase toxic assets and get the banks lending again. If they didn't implement that policy then we would be in a much, much worse situation than we are currently in.
 
Khayembii Communique said:
It needs to print money to purchase toxic assets and get the banks lending again. If they didn't implement that policy then we would be in a much, much worse situation than we are currently in.
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And how many toxic assets as the government purchased thus far?

Where has all this newly created money gone?

Can YOU follow the money trail from TARP? No one else seems to have any success.

Doesn't get much worse than that.
 
winston53660 said:
Pffft banks have been charging for early repayments for as long as I can remember. Why shouldn't the people who actually back up the money do the same?
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Where does the TARP legislation specify a early-repayment penalty?
 
winston53660 said:
Pffft banks have been charging for early repayments for as long as I can remember. Why shouldn't the people who actually back up the money do the same?
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They're being told they can't pay the money back early, not that it would cost them a fee to do so. Furthermore, there's no penalty in the agreement for early repayment. I know the rest of the Constitution is dead already, but you don't object to ex post facto laws?
 
celticlord said:
When I loan someone money, I'm usually thrilled to get it back ahead of schedule.
Click to expand...

Not if you're a private bank. Banks hate that. It totally screws up their asset to liability portfolio. When they cannot predict their maturity of their assets due to prepayment, they cannot hedge their liabilities to the same maturity dates. You'd be surprised just how many people banks have working on that.
 
It's especially interesting considering TARP was sold to the public on the notion that it was a loan which would be repaid and "the taxpayers" would get the money back.

Here, some banks are ready to make good on that.

As I said, there are those who would probably be very happy with the national socialization of the banking system, and as much of the rest of the economy as possible.

But for those who also claim to believe in freedom and self-determination, shouldn't that be decided by the people, and not just the President and the SecTreas? (Those who needn't be bothered by such notions -- well, we know.)
 
obvious Child said:
Not if you're a private bank. Banks hate that. It totally screws up their asset to liability portfolio.
Click to expand...
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Hmm. In the several mortgage agreements I'v signed, none of them had a penalty for early payment. No one I know has ever signed a mortgage contract with an early payment penalty.

If you're right -- why is that?
 
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