Why won't the Fed Govt. accept money?

[Mike Furley]

http://www.realclearmarkets.com/articles/2009/04/why_wont_geithner_take_tarp_re.html

There is something wrong with this, and I'm not pinning this all on Obama's administration. Read this article. Our government is acting like the mob. I made a joke about this in a previous thread, but this is no longer a joke if this story is true. I don't even care what the motives are of the banks who want to repay the TARP money. They are irrelevant. If somebody wants to pay back what they owe, repayment should not be denied. It's a fundamental issue of right & wrong. People need to get on the horn with their elected representatives about this one. If this stands, there's a really bad slippery slope this could slide down to. If they do this to the banks, who's to say they can't limit our own pay because we have student loans that we owe on and they refuse our repayment. I know that's a drastic example, but once the precident is established we are all bent over the table.

[Mike Furley]

and the answer is revealed:

Obama wants to convert the preferred stock the US Govt owns in over 500 companies to common stock - thus gaining voting leverage and total control over the banks.

This is a decent summary: http://thehill.com/dick-morris/obamas-leap-to-socialism-2009-04-21.html

Here are the relevant excerpts:

When the Troubled Asset Relief Program (TARP) intervention was first outlined by the Bush administration, it did not call for any transfer of stock, of any sort, to the government. The Democrats demanded, as a price for their support, that the taxpayers “get something back” for the money they were lending to the banks.

But to avoid the issue of a potential for government control of the banks, everybody agreed that the stock the feds would take back in return for their money would be preferred stock, not common stock. “Preferred” means that these stockholders get the first crack at dividends, but only common stockholders can actually vote on company management or policy. Now, by changing this fundamental element of the TARP plan, Obama will give Washington a voting majority among the common stockholders of these banks and other financial institutions. The almost 500 companies receiving TARP money will be, in effect, run by Washington.

And whoever controls the banks controls the credit and, therefore, the economy. That’s called socialism.

Obama is dressing up the idea of the switch to common stock by noting that the conversion would provide the banks with capital they could use without a further taxpayer appropriation. While this is true, it flies in the face of the fact that an increasing number of big banks and brokerage houses are clamoring to give back the TARP money. Goldman-Sachs, for example, wants to buy back its freedom, as do many banks. Even AIG is selling off assets to dig its way out from under federal control. The reason, of course, is that company executives do not like the restrictions on executive pay and compensation that come with TARP money. It is for this reason that Chrysler Motors refused TARP funds.

With bank profits up and financial institutions trying to give back their money, there is no need for the conversion of the government stock from preferred to common — except to advance the political socialist agenda of this administration.

Meanwhile, to keep its leverage over the economy intact, the Obama administration is refusing to let banks and other companies give back the TARP money until they pass a financial “stress test.” Nominally, the government justifies this procedure by saying that it does not want companies to become fully private prematurely and then need more help later on. But don’t believe it. They want to keep the TARP money in the banks so they can have a reason and rationale to control them

[michAGAIN]

Damn you Furley. It's people like you that impedes our progress in achieving a Fascist government. Now just drop that attitude and be a good little Comrade.

[RealSchool]

First off Dick Morris is a fool. Second I agree with not letting them pay it back YET. Having a band-aid on this problem won't solve anything, i tmust be fixed long term.

Republicans have ruined this country the last 8 years and now they think they know how to fix it? Now that is funny.

[Medic]

Here is where I sound like an apologist. Which is unfortunate because I hated Bush *BUT* in the interest of honesty I think you need to give some pardon to the Bush years realschool.

He inherited a shit economy from Clinton (.com bubble had burst) and then 9-11 happened. You can't really pin the problems with the economy for that period on him. His last two years he was a lame duck due to a democrat controlled congress.

Secondly, the economic disaster you see before you today was a product of the Fed artificially pumping value into the markets *and* repeal of the Glass-Stegall act in 1997 which was signed by Clinton. Bush did nothing to stop it but I don't need to explain all this you can google it. Anyhow, the point is that BOTH parties share blame and neither party is coming up with acceptable solutions (imo).

You have a glut of Keynesian economists in the administration now saying more government involvement is needed. Trust me when I say that the more government intervenes, the more protracted and severe the downturn will be. In about 9 months from now you will see the highest inflation of your lifetime, you can't just bailout failed companies with money you dont have with no security behind the dollar you printed and expect nothing to change.

You don't need to be a partisan to figure that out.

[Mike Furley]

First off Dick Morris is a fool. Second I agree with not letting them pay it back YET. Having a band-aid on this problem won't solve anything, i tmust be fixed long term.

Republicans have ruined this country the last 8 years and now they think they know how to fix it? Now that is funny.

first off Dick Morris may be a sexual deviant, but he does know politics. If you consider companies wanting to repay what they borrowed as putting a band-aid on it, how can you support the hyper-inflation policies of Obama that sound like 14th century "what you need are leaches for a good bleeding" prescription.

I think the blame is due to both parties. Frankly, as one who is a Democrat but more often than not votes Republican, it is a little disappointing that no Republicans have stepped forward with any leadership to provide an alternative to Obama, Reid, and Pelosi. The Republicans may have put the car in the ditch, but the Democrats are sending it over a cliff. They're killing us.

[RealSchool]

Here is where I sound like an apologist. Which is unfortunate because I hated Bush *BUT* in the interest of honesty I think you need to give some pardon to the Bush years realschool.

He inherited a shit economy from Clinton (.com bubble had burst) and then 9-11 happened. You can't really pin the problems with the economy for that period on him. His last two years he was a lame duck due to a democrat controlled congress.

Secondly, the economic disaster you see before you today was a product of the Fed artificially pumping value into the markets *and* repeal of the Glass-Stegall act in 1997 which was signed by Clinton. Bush did nothing to stop it but I don't need to explain all this you can google it. Anyhow, the point is that BOTH parties share blame and neither party is coming up with acceptable solutions (imo).

You have a glut of Keynesian economists in the administration now saying more government involvement is needed. Trust me when I say that the more government intervenes, the more protracted and severe the downturn will be. In about 9 months from now you will see the highest inflation of your lifetime, you can't just bailout failed companies with money you dont have with no security behind the dollar you printed and expect nothing to change.

You don't need to be a partisan to figure that out.

I agree with you 100%. All I am doing is flying off the handle like chriswebber and friends that want to paint all this doom and gloom on Obama after a month in office.

[chriswebber]

I agree with you 100%. All I am doing is flying off the handle like chriswebber and friends that want to paint all this doom and gloom on Obama after a month in office.

Yeah... as a large shareholder of a state bank, I had to personally make a decision on whether to vote to accept bailout money. We didn't. Makes me so happy right now. No backdoor nationalization, nothing, as of right now, free and clear. We didn't need it, we didn't loan out to subprime, we made good decisions.... I think it's purely incompetence. If the government wants a bank, they should open one in the post office. Compete with private contractors, just like the post office. Obama is grossly incompetent, being a lawyer ever a graduate from Harvard isn't that impressive. The guy has accomplished nothing outside of politics. Tell me when he started a company from scratch and then sold it for a couple million. Show me his patents. Show me something to believe he can achieve on his own without government help.

[RealSchool]

Yeah... as a large shareholder of a state bank, I had to personally make a decision on whether to vote to accept bailout money. We didn't. Makes me so happy right now. No backdoor nationalization, nothing, as of right now, free and clear. We didn't need it, we didn't loan out to subprime, we made good decisions.... I think it's purely incompetence. If the government wants a bank, they should open one in the post office. Compete with private contractors, just like the post office. Obama is grossly incompetent, being a lawyer ever a graduate from Harvard isn't that impressive. The guy has accomplished nothing outside of politics. Tell me when he started a company from scratch and then sold it for a couple million. Show me his patents. Show me something to believe he can achieve on his own without government help.

How did GWB do in business?

[amazinblue]

RealSchool,

I'm wondering - what do you think is an acceptable maximum tax rate for individuals?

[chriswebber]

How did GWB do in business?

He owned several... Had experience... Actually was paid by the businesses... Has obama ever received a real paycheck from a corporation? Doubt it.

[RealSchool]

He owned several... Had experience... Actually was paid by the businesses... Has obama ever received a real paycheck from a corporation? Doubt it.

I will take a self made man for President anyday over GWB and his silver spoon life.

I can understand your connection with GWB however, much like him you have others run your life and pull strings. Your dad not letting you join the military ring a bell?

[chriswebber]

I will take a self made man for President anyday over GWB and his silver spoon life.

I can understand your connection with GWB however, much like him you have others run your life and pull strings. Your dad not letting you join the military ring a bell?

Who is the self made man you speak of? Surely, you do not believe Obama is self made.... Seriously... Harvard Graduate? Self made would be like say someone with a business background running for president? Obama is far from self made....