Let me preface the discussion with the comments that preceded her statements, Peggy Noonan was criticizing the outlandish bonuses that were received during the time when these banks were making high risk bets that have ultimately cost you and I under the banner “were to big to fail we will bring you all down with us” which sad to say is much more fact then fiction. When Erin was invited into the conversation she used statistics to suggest that the Tarp money was well spent and did not go to continuing the lavish spending of these Monopoly Banks. Well after my blood boiled for 5 mins at the miss use and miss interpretation of these facts and statistics I felt the need to make clear the facts that Ms Burnett,s statements may mislead someone into believing issues that the facts just do not support.
So here goes, first she pointed Bank A who received last month $45 Billion in Tarp funds gave out $45 Billion in loans. She went on to point out that this fact proves they did not use Tarp money to pay bonuses. She stated …so you see they did not spend Tarp money on lavish bonuses for top executives.. as has been suggested.
WRONG, WRONG, WRONG… The bonus as a matter of fact went out through both the 3rd Quarter and the 4th Quarter of 2008, with only some modification, and with many top CEO’s only publicly suggesting they would forgo their 2008 bonus in the past few weeks, after public pressure came to bear on them. Yet we still see many employees of these same institutions receiving bonus awards in excess of their normal pay grade. So Ms. Burnett’s misinformation tries to dispel the facts with a rather twisted use of statistics and flawed logic.
If the Tarp money was to help these banks stabilize and loan more money into the system, then they normally would have loaned, you would have seen loans that included the $45 Billion in Tarp funds added to loan portfolios accompanied by bank resources loaned out last month. Instead we saw only the Tarp money loaned.
So lets say in an average month they would loan $10-20 billion you ad in the tarp $45 Billion and you should come up with $65 billion in new loans. Well according to Ms. Burnett they loaned just $45Billion last month so you see none of the Tarp money went to bonuses … end of her logic. Thank God!
Here is what should have happened and did not and why the logic only follows that banks paid bonuses with your tax money.
If the banks had actually loaned their money and the Tarp money it should have increased the amount of money out to loan substantially, this would have flooded the market and reduced interest rates and made it easier to pay loans and to refinance debt at a lower rates borrow for new start ups and expansions in small to mid size businesses making it easier to pay bills and grow the economy. Instead we only got the tarp money in the market and the banks continue to sit on the sidelines bleeding us dry.
Now some will question the logic if they were broke how would they continue to loan at the rates they were before? Well here is how they would have had to reduce costs such as Bonus payments to employees, Luxury items like corporate jets, Spa vacation/ conferences, reduced health club memberships in other words changed their lifestyles to deal with the MESS they created joining the rest of us in making some tough choices and come up with the money.
Let me back up one minute for all the non-Economists, A Bank makes money day in and day out by loaning money the loan payments support the operation of the bank, make profits that can then be re-loaned out to make more profits and cover more costs. They cover Payroll, Office space, Equipment, etc etc etc… I hope you get the idea. If they do not loan their income begins to decrease as loans are paid off and payments decrease. And Loans are paid off on a daily basis.
So what happened in this case was the bank took our current and future tax money made loans to you and I which we are paying interest on, did you get that little tidbit let me repeat it for you, they took your money and loaned it back to you for an added cost so the Dollar you gave them from your future taxes you borrowed back from them for 5.65% on average so the dollars you have left in your pay check just went to pay them a profit and they still gave out the December bonus money to most of the top executives.
So if you follow my logic and Economics 101 the banks loaned the Tarp money back to you and I at a profit and they kept the money they may have used to keep their business afloat and they made sure it was for the most part business as usual so the private club memberships got paid, the new Country club dues were made on time, no one had to cancel the fitness club membership, or the trip to the Bahamas for holidays because it was just to damn cold in New York. So what do you think? Did they spend the tarp money to help the economy get back on it’s feet or did they continue business as usual? I would point out that it is that business as usual that has collapsed our economy and brought about the second depression in our country’s history but hey they are the captains of Capitalism who are we to challenge them. Erin Burnett of MSNBC/ CNBC only demonstrated that she is shilling for a job as a spin doctor for the industry she is suppose to be reporting on and giving out miss information. Her comments only add to the haze that these large corporations have shrouded themselves in and suggested we all must ignore that man behind the curtain because he knows better then you and I. This maybe the very issue that has brought our economy to its knees once again. So the next time you wonder why you look to the Internet instead of TV for the real story here is one reason why.
If you only read one of my attachments this is a key to the argument
Here are some of the facts that the US will not report
This one from the Los Angeles Times last week when you peel back the facts applies to the top executives only the Division leaders that make up the CEO’s leadership team it does not deal with the next tear down which amount to Billions
Also a copy of the letter sent to the 9 banks that received Tarp money from chairman Waxman that still has gone un answered to the committee
One more voice of outrage over this continuing scam Peter Cohan
Also one last Article that shows only the top exec of the major banks are foregoing bonus and ” cutting ” those down the food chain.
My last comment and I hope you complete the poll How many of you received a bonus in December from your company? I want you to ask why not is it because you are not to big to fail?
Time to revitalize the Sherman Anti-trust Act and not let this happen again.
As Usual just my Opinions