Banks Refunding TARP Money: The Implications

by Joel Hendon⁽¹⁷⁹⁾ Red Star

This past week, the Treasury Department agreed to allow 10 of our largest banks to return the bailout money they had received in the first round of bailout gifts. Did anyone ever ask the sudden questions. Why do they want to return it? Everyone knows the answer to that. But Where did they get the money to return to the treasury? Is it just the same money they received? Probably, but if so, why did they beg for the money to begin with. Where is their catastrophic condition that was going to make them fold?

Here, according to the Associated Press, are the banks and amounts of money to be returned:

JPMorgan Chase & Co $25 billion

Goldman Sachs Group, Inc. $10 billion

Morgan Stanley $10 billion

U.S. Bancorp $10 billion

Capital One Financial $3.6 billion

American Express Co. $3.4 billion

BB&:T Corp $3.1 billion

Bank of New York Melon Corp $3 billion

State Street Corp $2 billion

Northern Trust Corp $1.6 billion

Total $71.7 billion

No one that I know of will deny that the economy became bad. But doesn't it seem strange to anyone except me, that things were not all that bad until suddenly everyone was facing bankruptcy and began yelling, "wolf". Almost every financial institution in the world was suddenly on the brink of destruction. Now, since the government has come up with trillions of dollars to spend on the salvation of the nation, what do we have?

Our system has built in checks and balances. Supply and demand coupled with intelligent business sense (minus governmental interference and restrictive regulations) will operate our economy well. The foolish operation of businesses will fail. Let them fail. The frugal and intelligent operation of businesses will succeed according to supply and demand of their product or service. If competition grows too severely, some will fall by the wayside but the superior will win. The government should only intervene in cases of fraudulent or unlawful activities businesses commit to enhance their success.

If people recall, the new administration-elect, in concert with the previous administration, postponed much of the legislation for bailouts and stiimulus packages until after the new administration took the reigns. Meanwhile, numerous conservative voices were admonishing the government to let most of the problems play themselves out, the strongest would survive and the economy would gradually come to life again.

But, all those people looking for handouts, individuals as well as just about every business known to man, suddenly had to have more and bigger handouts. Individuals who had over obligated themselves lost their homes, the banks who had allowed them to over obligate themselves suddenly had a raft of homes which would not pay off the indebtedness if sold. I would be harsh enough to say, "tough", but that would let too many off the hook.

First and foremost, government creation and maintenance of institutions such as Fannie Mae and Freddie Mac is something that should have been abolished shortly after their beginning. And legislators such as Barney Franks and Chris Dodd whose positions on the finance committee gave them far too much influence over the nations financial institutions. Many of the banks, including Fannie Mae and Freddie Mac, were pressured to allow unqualified applicants to obtain mortgages, some for more than the properties were worth. This is worst singular item which influenced our present economic problem.

Then when the ultra liberal legislative and executive branches took control, without using any calm and extensive research, drove us over the cliff into a depth which will, in my opinion, will never be overcome. Our country's indebtedness as of June 12 according to brilling.com's U.S. National Debt clock was over 11.3 trillion dollars. According to an article in CBS News, this debt is expected to reach 12.7 trillion by the end of this fiscal year, on Sept. 30. and 16.2 trillion by Sept. 30, 2012 as this presidential term ends.

I would encourage all readers to visit and read the CBS article by Mark Knoller: http://www.cbsnews.com/blogs/2009/03/17/politics/politicalhotsheet/entry4872310.shtml

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Article submitted Friday, June 12, 2009 & read 68 times.

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