Barack Obama

TARP: Let's Keep the Strings Attached, and Show These Banks What a Real Rootin-Tootin Ol' Fashioned American Bailout is Really All About!

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You know, you want to believe that our governing philosophers aren't as nakedly power-grabbing as they seem to be, and that the "intellectuals" who support them think that government giveaways are really necessary because, well, they are really necessary, not just as cheap support for power grabs in the alas all-too-convincing to the general public arguments about pipers calling tunes. But see the regrettable Michael Hiltzik in the Los Angeles Times:

The headlong rush by big banks to pay back their TARP bailout loans -- Citigroup is the latest candidate looking for the exit -- has prompted a lot of stock-taking about this widely detested $700-billion program….

One question that perhaps isn't being raised enough is this one: Should we let the banks repay the money?

To put it another way, by allowing the banks to exit the emergency program that saved their butts in the fall of 2008, is the government giving up what could have been an effective tool of leverage over this misbehaving industry?

….Indeed, the banks want out chiefly to escape what they think of as onerous conditions imposed on the loans, such as $500,000 caps on the cash compensation of their top brass….

….What makes the banks' haste to exit TARP even more unseemly is that while they grouse about the largely toothless constraints on executive pay, the government deal was extremely generous by almost any measure. The loans carried an initial interest rate of 5%, much lower than what spavined institutions such as Bank of America and Citigroup would have been able to get anywhere in the universe……

What was best about TARP was that it placed a congressional stamp on the government's determination to rescue the banking system….

Meanwhile, the president does what he can to lay the groundwork for the next bank bailout by jawboning the industry to start getting "extraordinary" with their lending:

While White House press secretary Robert Gibbs said all the bankers agreed to take "second looks" at loans that had been denied, some executives cautioned that they still needed to act judiciously.

"Not everyone is credit worthy in today's world," Robert Kelly, chairman and chief executive of Bank of New York Mellon said on CNBC after the meeting. The U.S. economy is recovering, he said, "but it's really fragile."

Judicious, schmudicious: Repeat after me and President Obama: what a debt-sunk economy needs is more debt, stat!