It's criminal . . . and no one seems to care
Suppose I loaned you some money.
Suppose the market interest rate is 8%.
But I made the loan for 4%.
Think I gave you a gift? How about a $75 Billion gift?
That's exactly what happened with much of the first TARP money. Read on.
A few weeks ago the was a Congressional Oversight Panel ("COP") report that alleged that exactly this happened with the TARP money - the taxpayers made a gift to the financial industry of more than $75 billion.
Hank Paulsen assured the Congress that the government would get value for investments made in these financial institutions. Didn't happen.
Don't tell me that neither Hank P or that creep Neel Kashkari can't correctly value preferred stock.
That's corpfin 101. As the reports note, Warren Buffett got much more value for his dollars than did Paulsen/Kashkari.
This is simply a criminal looting of the Treasury by Hank Paulsen, who owed what I would consider a fiduciary obligation to the taxpayers.
It also makes you wonder just how real this 'crisis' is, at least for those firms which now say they don't like the TARP terms if it limits compensation. Example - American Express suddenly became a bank so it could participate.
But now - the financial institutions that took a lot of this money may be subject to compensation limitations . . .and are looking to repay the funds so they won't be subject to those limitations.
Guess they just saw TARP as a gift of 'cheap capital.' It was.
Links
http://cop.senate.gov/...
http://cop.senate.gov/... (LArge pdf)
When will Obama realize that Bushco was simply a large organized criminal enterprise that should be prosecuted under RICO statutes?