Tuesday, May 19, 2009

Banks Looking to Get Out of TARP Screw Taxpayers in the Process

The big headline on this morning’s Huffington Post read, “Banks Angling to Undo TARP Deal that Pays Back Taxpayers.”  This linked to a story from the New York Times that explains that banks are trying to pay back their TARP obligations.  On the surface, this would seem like a good thing.  However, they are trying to do this as “quickly – and cheaply – as possible.”  I know, that’s good business.  Unfortunately, it’s the taxpayer that helped bail out these banks that will take the hit.

Remember how TARP was sold to us?  Taxpayers would help bail out the banks by buying “warrants.”  In turn, the banks would recover, and the taxpayer would make a profit because these warrants would be valued higher than when they were purchased.  Remember that? 

Look, I understand why banks would want to get out from under the thumb of the Government.  All those rules and oversight really make for a square party, you know?  That said, we, the taxpayers of this country, came to their rescue and deserve to reap the rewards of a healthy, profitable bank. 

My optimistic side hopes that the Treasury Department plays hardball and sells these assets when the country can make something on the deal.  At the very least, break even. 

My cynical side already knows how this is going to turn out.

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