Archive for November, 2010

almost two years, the political class was in all his statements argued that if the Congress and the president immediately spend the vast TARP rescue package for financial institutions in the country, the banking world and the whole economic system would collapse. And when she said immediately, do not mean it in a few months. At that time, the politicians of the time were desperately arguing that the bill within days, possibly weeks, should be passed to avoid the financial disaster.

At the time there were two important questions in a hurry, as the politicians said was needed. First, if this disaster is imminent so great and so immediate, as politicians are so blind and ignorant not see coming? Second, even if the political class has many years studying a problem, they are rarely good solutions, so that the odds were definitely stacked on hastily written, voted and implemented TARP legislation, the two perspectives on waste and fraud .

Now that we’ve removed almost two years from the implementation of the TARP, it might be a good time to see if the program is really good and that the hundreds of billions of dollars involved were well spent. Now I’m no expert on sophisticated concepts for finance and public support, I am ignorant, what were the conditions that the Treasury Department, bought and other tools of high finance. However, I understand the following facts.

– According to Wikipedia, the TARP legislation signed third October 2008

– Fortune magazine wrote 29th October 2008 that most large financial institutions have their first payments TARP

received. – On 17th June 2009 reported an article in The New York Times that have JP Morgan and nine other banks have already paid their money TARP

<. p> -. In this article, JP Morgan CEO Jamie Dimon said his bank needed the money in the first place

– A similar article on CNNMoney.com reports that Chicago-based bank, Northern Trust, also confirmed to report that the Treasury Department’s $ payment TARP. However, you compare this with a recent article in the 16th August 2010 issue of Fortune magazine, said that Northern Trust has 22 years of consecutive profits (including years of “The Great Recession”), on c ‘s savings deposits increased compared to 50% in 2009 to 2008, and during the financial crisis was waiting, Northern Trust customers in long lines to about a dollar a day, that customer to deposit placed by other financial institutions.

– CNNMoney.com This article has also pointed out that the largest donors had worked hard to get out under the plan requirements and restrictions for several months, and that many have raised billions of dollars in fresh capital ands had a loan issued without state support.

– Several months before TARP payments begin, the Associated Press reported that most major financial institutions that have received money, to save the government has made great contributions to every convention Presidential political party. Four of these companies donated only AIG, Citigroup, Goldman Sachs and Freddie Mac with a combined 0.1 million. Note that three of these four, the exception of Goldman Sachs, turned out to be, if money was available, the rescue package in the most terrible financial straits.

– The Center for Responsive Politics has an interesting article on its website 4th February 2009, the listed published, how much money each member of the TARP funds received and how much money these companies have in the past expenditures of lobbyists and campaign contributions, contributions to the people in the Congress to decide how much money the companies are made will save taxpayers. According to the website, “Members of Congress were to a certain degree of state to go that the money should, and lobbying regulators to invite them to put money in banks and financial institutions-specific, including in their neighborhood.” In other words, the taxpayers’ money not to the needs and merits distributed, but on political considerations.

– The article continues that some of the largest recipients of campaign donations from these companies were people in the most powerful positions in Congress to decide where the money went TARP
The analysis of the article shows that. few exceptions, these companies received the largest amount of money spent on campaign contributions and lobbying the most money TARP.

– News has reported that at least two congressmen, a senator and a Hawaiian of Congress from California, had to save himself for the Ministry of Finance lobbying at local banks reported, in which have these two members of Congress considerable personal financial opportunities and Risks’ instead. / P> – An article in the Huffington Post in November 2009 reported that the Inspector General has been actively TARP 65 cases of payment fraud TARP p

-. Finally, an article of 16 August Magazine’s 2010 Fortune wrote about how “investment banks are managed by companies and banks battered larger competitors.” In other words, new financial institutions have emerged to fill the gap left by the disappearance of the failed financial institutions. This is called the free market.

What we do know from these facts it? rescued with the greatest respect for those who think the TARP world, we should find that TARP is a waste of taxpayers’ money has been, consider the following conclusions:

– In the three or four months after receiving billions of dollars the government. most financial institutions were already at ways to restore them, mostly followers from June 2009, just seven months into the program. If these financial institutions have been as bad as they could pay back the money so quickly? I think Jamie Dimon said the content, especially, most financial institutions do not really need the money. I think they thought a free meal and later discovered how restrictions that came with the rescue package, including the very important executive compensation limits and quickly decided that not been a free lunch. This conclusion is supported by the results of the Northern Trust confirmed through the years continue to thrive despite the recession, continued their two decades of sustained profitability, you could not even wait until the money unnecessarily back

-.. A cynic might conclude that the political class saw an opportunity in both areas. First, they could use the money of taxpayers to both repay the banks, which they celebrate their party and presidential elections, conventions and have a new source of campaign funds slush funds helped the management of the TARP money to the company that gave the most to their re election campaign . Second saw some politicians an opportunity of local banks to save personal benefit of politicians. None of these factors were to rescue world financial markets, it was for the benefit of the political class

-. A proponent of the free market would take a step back from the Tizzi and realize that there are few financial institutions that were really deep, serious trouble. Nowhere above to see where the Bank of America and Citigroup at the top of their money back TARP. were the two banks were likely was in grave danger of bankruptcy, but their performance was terrible by the American taxpayers that they and their shareholders for the incompetence of their management have been saved rewarded. If you think the first conclusion above, most banks do not need bailout, then we should have Citi and Bank of America to fail and collapse, it is a natural process in the open market. Or they could even taken drastic measures to take than other companies when financial difficulties (eg the dismissal of employees cut, dividend, sell more shares to sell to someone looking to buy, etc.) to collect money from the debt. At least the pain suffered by shareholders have, not the taxpayers. They made bad business decisions they should have ceased their activities and to enable a more efficient and smarter competitors to take responsibility for their business or new competitors, as stated in the article above Fortune to start from the ashes to do business. It would be a lot of sound financial institutions, new and old, were to take over if Citi or Bank of America failed

-. Since there are dozens of fraud cases in the study, it’s probably a safe bet that many smaller TARP recipients do not need money from the bank rescue operations perspective, but the owners of small banks, to cheat that the possibility of the government and taxpayers .

fraud, lack of respect for the free market take care of solid companies to account and punish the weak, became a new source of campaign funds for politicians and a potential source of free money, courtesy of U.S. taxpayers the reasons for the existence of TARP, not the economy of the banking system in the world. Many of these wastes through TARP, the relationship between campaign contributions tasteless, politicians and businesses. Therefore, the implementation of the borders is driven office of members of Congress is so important. The mandate would increase the incentive for politicians to use taxpayers’ money to fund their reelection campaigns removed at the expense of U.S. taxpayers.

TARP: just another example of where the Americans and politicians lost profits

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Financial Classes