Last I heard tarp money was used for BAC to buy Merrill Lynch and overpay for the purchase. I also heard tarp bought 1.9 million in renovations for the Merrill Lynch CEO and bonuses for all Involved. 90% of the Tarp money did not go into the economy, it was squandered into bad investments, bonuses and etc. We are going to end up with government funded Zombie banks and be like Japan.
Until we begin to let things fail we wont get out of this crisis. That includes banks. BAC was mer and countrywide combined. The fed just fed one into the other until BAC failed and now there is no one big enough to absorb it. The FED is a joke and run by morons
I'm not trying to personally attack you....but Last you heard is wrong. BAC overpaying for ML can only be determined 5 years from now. You also heard wrong about 1.9 million in renovations for the ML CEO... it was 1.2 Million and it was before any TARP was ever even discussed...The monies for this renovation was approved for Thain's office in December 2007 (not saying it wasn't a stupid thing to do) 90% of the TARP money did not go into the economy???? I'm not even going to ask you to show your math, I think we all know that is just a made up number you think soounds good. You may not like to hear it, but that TARP money has saved countless business from going under and laying off countless employees. Banks need that money. This is not like Japan. The BOJ didn't let banks write down bad loans while here in the good ol USA, we force them to write them down(google: FASB 157)
Actually that is assured. You and I, and everyone else will be able to pay off our debts with money that has very little buying power compared to the buying power we borrowed. Those in debt will do relatively well, while those with no debt and hoards of cash will be punished. Transacted goods will see outsize inflation, while some hard assets may even deflate a little if payrolls fall behind inflation, which seems likely. When the US gets to the point that it can't borrow enough to pay its current accounts due things could get very dicey. Under these conditions borrowers, those that still have a job at least, thrive and lenders suffer. If you were a bank today, and still in business, would you want to lend money, i.e., buying power, knowing you'd be paid back with funny money? I don't think so. So don't expect banks to loosen up their coffers anytime soon, unless they are made an "offer they can't refuse." On the other hand, it doesn't do banks much good to hoard cash. It seems ironic that just as they need to convert any cash they have in excess of reserve requirements to hard assets, they are involuntarily acquiring real estate. But what will lose value faster, the value of their newly-acquired real estate, or their cash?
The only way out of this is a coordinated debt default. Until that day happens the Central Banks will continue to print infinite amounts of money. For anyone to have a rational answer and say that TARP has helped us is brainwashed. LEH was left to fail on the grounds of it being too big to bail and a week later AIG was bailed out. This is selective socialism. UYG/C/BAC are all easy buys. You buy them because you know that if they go any lower the entire system is imploding. I'll worry about it when I wake up one morning to trade the London Session and the Currency and Fixed Income Markets are closed.
Again I'm not trying to fight. I just think its important Americans know why certain things happened. LEH was an investment bank which is much different from commercial banks such as BAC which has an investment banking division. This is one reason why the pure play investment banks are/have converted to commercial banks. The reason LEH was allowed to fail is because no one wanted to buy it, it was not in danger of losing insured money such as BAC, CITI, etc... AIG was bailed out because people depend on it. It is "socialistic" but I wouldn't call it hardcore socialism. AIG is being forced to liquidate. If you read what is going on with AIG, you will see that its prepping most of its business units for sales and waiting with the blessing of the US so that not everything is sold at fire sale prices.
Here's my take on why TARP capital injections might not work. One of the big problems now is counterparty risk. Who knows which banks are solvent? You can't tell from their balance sheets b/c we don't know who has the bad assets, and you can't trust the marks. IMHO if you skip the philosphical questions about wether the govt should get involved and accept the political reality that they are, then the right way to deal with this would be to find out how big the losses are at each bank before recapitalizing. Then after putting new capital in you know the bank is solid. Maybe start by either getting the bad assets out of the banks like the "bad bank" proposal or re-establishing some pricing transparency in the market like the auctions would have done. Instead we skipped that hard step and just dumped an arbitrary amount of capital in, hoping it would restore confidence. Under the TARP CPP program that most of the money comes from, they put in something like 1-3% of assets. I don't feel like looking up old balance sheets right now, but I would bet that 3% wouldn't have done much for Bear or Lehman or Countrywide. So why should anybody think that a 3% investment will make a random bank trustworthy when they haven't come clean about what's really in the closet?