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|User Info||Pajamas Media: Entitled To Its Opinion, Not Its Own Facts; entered at 2011-10-18 07:18:37|
Another possible reason for the difference in interpretation is that not all banks viewed tarp the same. There certainly were banks that viewed tarp as a forced, extorted loan. BB&T comes to mind. I have heard the former president of BB&T, a well known libertarian, speak several times. He makes a very convincing case that they did not want tarp, were forced to take tarp, and paid it back as fast as they were allowed to with millions of added interest expense that they didn't want or need to incur. Then on the other hand you most likely do have some back-slappers that were just pleased as punch to get bailed out AND just as importantly to have the taxpayer and capital markets unable to distinguish them from the healthy banks.
Show me one of these banks that claims they were "Extorted" but did not issue ONE FDIC-guaranteed bond during the time or otherwise exploit the crisis and I'll believe it. The bankers that got ****ed (and there were some) were the regional and small local banks that didn't get TARP money but got gang*****d by the undercutting of their markets by those who DID get bailed out.
The problem with these claims is that the back door benefits were ENORMOUS and a simple GIFT to these institutions. It was done without a bit of public debate or even a vote in most cases. The differences here are not small - 50 basis points on a billion dollar bond issue is a half-percent per year in money you keep rather than give to the investors, or $5,000,000 annually. Over 10 years that's $50 million per billion borrowed, or a five percent difference on the PRINCIPAL. Not exactly small potatoes, is it, especially when you consider that a bank running 10:1 leverage turns that into $500 million or 50% of what they "borrowed" that goes straight to the bottom line!
I'm not surprised that the executives saw a LOT of value in those "guarantees", because there was! It was dramatically more than their "cost" of the "alleged regulation", and even better the banks didn't have to liquidate their trash - an act that would have put most if not all of them out of business.
As for BB&T specifically the idea that they didn't get anything out of this is utter crap. Remember who took over Colonial and the loss-share agreement they got? Colonial booked something like a 37% loss on their ENTIRE portfolio when they went down with their CRE portfolio being materially worse than that; BB&T ran a nice slide presentation on the WINDFALL they received by being able to coordinate that takeunder along with the guarantees they got in the process. Read that slide again - it ought to make you puke.
I said at the time that this was a monstrous heist, and I stand behind that. These institutions were not "taken over", the American taxpayer was robbed although the immediate form and fashion wasn't obvious to many. This much is fact: You cannot give value to someone without taking it from someone else, and the value given the banks was taken from the people.
Last modified: 2011-10-18 07:19:49 by genesis