Word: tarp
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...There's little hope that the type of shares the government is buying in banks as part of the Troubled Asset Relief Program (TARP) will plug the hole in the banking system's bucket. Paul Miller, an analyst at FBR Capital Markets who has written a number of reports on the capital issues of banks, says the only way to solve the problem is for the government to stop buying preferred shares and start taking direct ownership stakes. Of course, the issue with that approach is that the problem at the banks is so large, Uncle...
...TARP does nothing to patch the hole in the banking system. And it certainly doesn't do anything to encourage banks to make more loans. Yes, banks have gotten nearly $300 billion in money from the government, and that's a lot of dough. But it's not free dough. In return for federal cash, the government has taken preferred-stock shares as the firm's markers. Unlike common stock, which is the kind you or I would buy from a broker, preferreds have to eventually be paid back, so they are really loans, not additional capital. (See which country...
...Paulson says that he acted as expediently as he could. The financial and credit system probably was days from collapse when he received the first $350 billion of TARP funds. Paulson would probably agree that his actions were not based on careful plans, but the time for careful plans had passed...
...Paulson and Representative Frank could have put in a number of rules the day the TARP cleared Congress. Frank agreed to an oversight commission that would review how the money had been spent, after it was spent. By doing that he simply wasted the time of this commission. It became nothing more than witnesses to recent history...
...bonus issue for two reasons. The first is that fighting with the banks over which investment banker should be paid what amount would have taken too long. The second was that he did not want to appear to be the de facto CEO of all the companies which got TARP money. He decided that in this crisis the banking executives would have to use their own discretion in the use of the money. He chose to leave this decision to their boards and not the Treasury. And as it became clear that the government would have to put up more...