Bundling The Banks Into A TARP
Back in October, the banks appeared to be in very deep trouble. Such deep trouble that they
were forced to enter a deal with the Devil decided to run to the government for assistance. But they were shocked — SHOCKED! — when the government starting attaching a whole bunch of regulations and conditions to the deal after the fact.
So they want to return the money. And the government won’t take it back without a fight:
The bottom line for the banks is that if they want out of TARP, they have to be able to withdraw from all the other sources of emergency public support that the government has given them. If they want the support, then they have to agree to the conditions and regulations that come with TARP. No subsidies without regulations. To put it into more common terms, banks can decide to break up with the government or they can decide to stay together. But they don’t get to be friends with benefits.
Imagine the outcry from utility regulators if you signed up for the sports package with your cable company because you wanted, say, SpeedTV. After a while, you grow tired of the programming and all the extra cost because you don’t think you need to pay for TVG and all the other channels, so you call the company and try to cancel the sports package. And they tell you that if you want to quit the sports package, you’ll have to cancel cable, internet, and phone service altogether — you can’t have just one!
I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn’t much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street’s black hole. So why no cheering as the cash comes back?
My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell ‘em what to do. Control. Direct. Command.
I’ll have a more detailed post coming up when I get around to it, but I think I, too, was naive. I expected more from Obama. I honestly believed that he was actually trying to become President because he wanted to improve outcomes, not just drive the train. I was sure, of course, that Obama was going to be pointing us the wrong direction, but I thought he was at least going to try to do so carefully, efficiently, and taking input from all sides before doing so. In short, I knew I wasn’t going to like him, but I thought he was going to be reasonable.
Not so much. He wants to control the financial sector. He doesn’t just want to fix it, he wants to remake it according to his own ideology. He doesn’t want them to succeed without government; he wants them to be dependent on government. I thought Bush was an exceptionally authoritarian President, but it seems that he was just laying the groundwork for Barack Obama.
The Feds have the banks in the grasp of their talons and they’re squeezing. And by god they won’t let up until submission is complete.