Enough about healthcare. We need to talk about finances and the great news of the past few weeks. Specifically how Obama and Geithner's TARP has worked brilliantly to get those too big to fail banks off the dole and return our country to prosperity.
While it is true that Obama and Geithner continued the TARP program, President Obama with his leadership put some strong restrictions on TARP which has encouraged banks to re-pay the money early with interest by rasiing additional capital and dilluting existing shareholders.
This was a sharp departure from the GWB adminstration which gave the money out with no strings attached. They also effectively ended TARP by rejecting CIT's request for additional TARP funds and saying, you guys work it out with your bondholders...and they did...
So where are we now...
- Bank of America paying back in full with interest
- Goldman Sachs paid back
- Citigroup and Wells Fargo in discussions to raise additional capital and pay back.
- CIT emerging out of bankruptcy with little negative effect on lending
- AIG is working on a payment plan as well although that will take a little longer.
And most importantly the Obama administration made it painful for these organizations to be in the TARP program which will make them think twice about making risky and stupid financial decisions in the future. Many think it was the executive pay restrictions and certaintly they helped..but what was more important was the negative stigma of being on TARP list.
This will give increased pressure on Citi and Wells to pay back quicker and let the shareholders take the hit in further dilution. Of course that will be counteracted by the lack of stigma where everyone will win.
Overall, many predicted another disaster of a Trillion dollars or more in TARP problems and now it looks like it may end up being a net loss to the taxpayers of under $100 Billion which today is almost a rounding error.
So lets see what additional good news we have today...
- Foreclosures down again for the 4th straight month in a row...
http://finance.yahoo.com/...
- US Factory and Services grow over 5%...
http://www.reuters.com/...
- The job drought may be over...
http://norris.blogs.nytimes.com/...
- Staples sales rise...
http://www.reuters.com/...
So for all the doom and gloomers out there...it looks like we have hope for a great holiday season and by next summer having a recovery in full swing for the mid-term elections...lets keep positive and hope I am right...