When I hear of TARP I think of a large canvas. I won't go there, although there likely is a lot of truth to hiding the issue disguising it rather than dealing with it. Then if you type too quickly, you get TRAP instead of TARP. This is very close to the truth.
By throwing billions of dollars at an imaginary problem (because it was largely created by the mark-to-market fiasco and therefore is not real) we have created victims out of our major lending institutions and caused millions of Americans to look to the federal government for even more unwise bailouts and giveaways.
Let's return to the free market where banks (and auto makers or any other business) had the right to fail if they were mismanaged or over-indulgent.
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Steve -
I think I found your missing TARP funds. Maybe Citibank is using some of their our millions in TARP fund to cover this $27 million dollar loss - story from the NY Times. Yes, our friends at Citibank continue to show us that they can't manage their, their customers or our (the taxpayers) money. I mean how stupid can the bank officials be to be duped by a good old fashioned Nigerian e-mail scam - albeit a bit more sophisticated than the "Dear Ryan: I am the son of a Nigerian Oil Minister and I need your assistance in..." What bank allows a person to send a request to honor fax wire requests and fails to confirm the original request or any of the transfers with the account holder.
The free market economy should permit badly managed banks to simply fail instead of propping them up so they can unfairly compete with prudently run banks that take lower risks for more conservative returns.
Ryan,
Thanks for your agreement and support - as well as a great response. From what I have read, there were no bank failures until this mark-to-market accounting was reintroduced. :)
Steve
Hey Steve, I like your way of thinking! If you were running for office you would definitely have my vote!
Mark-to-market accounting definitely caused problems. It required banks to find additional capital which caused lending to slow down and credit markets to melt down. Read an op ed piece in the WSJ that did a great job outlining the issue. Getting old - can't remember when it appeared and didn't mark it.
Steve, I have been wondering the same question. I think it is really a trap or rather a c**p. I do not see any effect at all so far and I doubt it will have any effect at all.
Teresa,
Thanks. I would accept your vote, but I'm not running. :)
Steve
Ryan,
I read that article. If there are so many people that know that this issue is the culprit, why is there such opposition to changing it? :)
Steve
Huiting,
Bush and Obama have both dug deep into the coffers, and I'm with you. I don't get it. :)
Steve
Hi Steve
The free market has built this country, we need less government.
Good luck and success
Lou Ludwig
Steve...
Although I am against bailouts per se, if the government helped the industries retool to produce more efficient automobiles with an eye towards energy independence ... well ... I could go for that!
Lou,
Very well expressed - couldn't have said it better. :)
Steve
Richard,
I think I see where you're going with this, and it's the difference between an investment and a gift: here's $100,000 to help design or improve a specific product that our country needs to be competitive in the world, and we want to provide some seed capital with a backend ROI v. here's $100,000 for your general fund. :)
Steve
It looks like we're all pretty sick over these bail-outs and government involvement with these companies.
We're not allowing these companies to be held accountable for their actions, instead we are rewarding them for their bad-management and stupidity.
Hi Steve—The only govenment bailout I have approved of was with Harley Davidson many years ago. They retooled their entire manufacturing effots, built better motocycles AND repaid every cent to become a better company from the ground up... that I can live with, but not this lack of accountability. Many of us fail, but no one bails us out and I don't want them to. Support and encouragement is always appreciated, but it's my responsibility to correct my failures, learn from them and move forward.
Steve,
You make a great, and understated point. Those of us that choose to learn and educate ourselves know about mark-to-market, however I do not recall hearing or seeing this explained on network tv. I wonder if its because the concept may be a bit difficult for most to understand or if its because they find it easier to just point the finger at certain entities such as lenders.
Steve - I think it boils down to - we can't change what we don't understand. Mark to market is a pretty complicated subject for the average person to understand. If they don't understand it, then there is no strong push to change it. As much as banks spend on lobbying, I'm suprised they haven't pushed through some legislative initiative to change this accounting rule/practice.
Toula,
You are quite right, but at this point they seem to control the car keys. :)
Steve
Linda,
Thanks for sharing that example. That clearly wasn't a bailout but a loan. :)
Steve
Karl,
I don't think it's difficult to understand, but it's keeping some people employed. Yesterday the tone was that this is not a solution to be given any credence by the Fed. :)
Steve
Ryan,
From the way it seems, you and I and many others know that this policy needs changed, but the legislators, the Fed, and some stuffy accountants don't want it changed, so that's that. :)
Steve