The hilarity never stops with these bankers. See, now that the taxpayers have bailed their sorry asses out of bankruptcy court, it turns out that they are, to use the NY Times’s words, “balking at the hefty premium they agreed to pay when they took the money.”
Some of the healthier banks want to pay back their bailout loans to avoid executive pay and other restrictions that come with the money…. Both large and small banks have pressed the Obama administration to make it less costly for them to exit the bailout program by waiving the right to exercise stock warrants the banks had to grant the government in exchange for the loans.
And this guy is a comic genius:
Douglas Leech, the founder and chief executive of Centra Bank, a small West Virginia bank that participated in the capital assistance program but returned the money after the government imposed new conditions, said he complained strongly about the Treasury Department’s decision to demand repayment of the warrants. That effectively raised the interest rate he paid on a $15 million loan to an annual rate of about 60 percent, he said.
“What they did is wrong and fundamentally un-American,” he said. “Even though the government told us to take this money to increase our lending, the extra charge meant we had less money to lend. It was the equivalent of a penalty for early withdrawal.”
Wrong and fundamentally un-American! What a maroon. Somebody call the WAAAAHHHmbulance for Mr. Leech.
The irony is unbearable, isn’t it? The financial crisis that necessitated this wretched bailout originated in mortgages with nasty features like variable interest rates and prepayment penalties. To fix the crisis, the banks took out taxpayer-funded loans that featured, essentially, variable interest rates and prepayment penalties.
And gosh, look at that! When those loan terms play out, the borrowers don’t like them! I hope some enterprising reporter asks Mr. Leech, and any other banker who’s moaning about the repayment terms, how accommodating they’ve been to their borrowers who’ve found themselves needing to renegotiate the terms of their mortgages.
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p>Hilarious, no? “Toxic assets,” yet valued by the banks at 91% of their face value. There’s a long way to go before they figure out how to clear the books.
To criticize a small bank for wanting to give the TARP money back is unfair and misdirected. For small banks in America, the cure has been worse than the crisis. And here in Massachusetts, where we have a disproportionate number of mutual and cooperative banks, the reasons for rejecting TARP money or giving it back are sound and a better alternative to taking the money for many of these banks.
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p>First, one has to understand that small banks weren’t the problem. Most small (hometown or regional banks) didn’t give out sub-prime loans, nor did they participate in the derivatives market. They kept loans in house or continued to work with the federal home loan bank to give out mortgages. Since this crisis, precipitated by mortgage companies and a few large banks, and exacerbated by the Bush administration’s drive to collapse the banking industry into fewer larger banks, small banks have been called upon to help fix the problem. First, recapitalizing Fannie Mae and Freddie Mac included issuing new trust preferred stock by the federal government. That meant that the existing stock owned by many smaller banks became worthless. Next, not only did the FDIC recapitalize their funds, but they went from a guarantee on the first $100,000 in deposits to $250,000. That meant that well capitalized banks (i.e. healthier banks) had to contribute to this fund twice over the past year. All of this has taken money away from well-run small banks that continued to do the same lending that they always have done.
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p>At the same time, the crisis in larger banks has made it difficult at times to find money to loan if needed. And the state just passed an amendment in a supplemental budget that is well intentioned but could lead to larger state charges in the future for smaller banks.
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p>Healthier banks, not banks in crisis have been offered TARP money. However, there are several problems with this. First, the federal government becomes a partner in your bank and they state up front that the rules by which one gets TARP money haven’t been fully developed. That means that your new partner can change the rules in the future. That’s not good business practice for anyone. Second, the rules for repayment are stringent and may force banks to make decisions they don’t want to make. Many mutual and cooperative banks are small home town banks that are happy being small and responsive to their communities. The rates being asked as loan rates and the rates being required for repayment may not be doable for small banks and that will require mergers with larger banks or may mean that banks need to go public. Both of those options diminish depositors influence in their local banks.
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p>Getting TARP money also requires that that money be lent out locally. The question is: Who do they lend to? In a down economy, mortgages at federally expected rates can’t sustain the bank’s ability to repay that money and there isn’t much business for commercial loans.
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p> Finally, we have two problems that preclude use of this money. First, while banks are being told to spend this money, both state and federal regulators preach risk aversion. If a small bank takes on speculative loans or mortgages, regulators will require such things as placing these loans on watch lists or making banks create large loan loss reserves in order to cover this speculation. Both of these cost banks money that would be put to better use creating loans for those that need them. Banks on watch lists may pay more for capital. Again this hurts our small banks. One other problem with bank regulations is mark to market rules. After Enron (who valued assets based on greatly inflated future worth) the regulators decided that values should reflect present value of that asset. Therefore, since many things aren’t worth as much on one day as they are in the longer run, we are now devaluing underlying assets. For example, a commercial property just getting a mortgage is valued at zero, given the length and value of the mortgage. However, we know that it is worth something even if just for property value. We need to change this to find a happy medium.
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p>The second problem is that our commercial and business lending is changing and we haven’t caught up to it yet. A business loan in the 60’s would be someone starting a widget factory. They would apply for a loan for widget making machinery and, using orders/receivables as well as the capital equipment as collateral, they would get a loan. They would start making widgets and billing their customers for these and that would repay the loan. Today, it may take a new technology company with very little capital equipment up to fifteen years to come up with a product. How does the banking industry react to these needs given our risk averse regulatory framework? Not well and everyone is struggling to finds ways to overcome this.
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p>Two more points: first, the smaller banks in general don’t pay salaries that are impacted by federal limitations, so this is not a consideration for our small hometown banks. Second, the real problem here is that the large financial markets forgot why they were there in the first place. These markets were created to find capital to run the underlying businesses. People would invest in companies in the market and that money would run the widget factories. Over the past few decades, the markets have decided that they can make money on the money. However, at the end of the day, a dollar is only worth a dollar. They forgot why they were there in the rush to make money, lots of money for themselves. Madoff isn’t the problem. He is a symptom of the problem that the market poses as it is currently run. We need to change that mentality. If we do not, we are only resetting the dials to zero and this whole business begins anew.
Sorry for the long post, but this just skims this very complex issue.
against all bankers. This is simply “red meat” for the anti-business/anti-banking crowd.
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p>If any bank participated in the TARP program and can now get back on their feet and pay back any TARP money why wouldn’t we want let them. If a friend of mine was in a jam and he borrowed money from me for a year, why would I tell him he can’t pay it back early?
to your friend in November with the stipulation that he’d mow your lawn all the next Summer, would you excuse him from that agreement if he paid you back in March?
Following your example: It would be more apt if you had said the city went to your neighbor and said, you have to take this money and you will mow my lawn all summer, and by the way, I may come back at some point and tell you other things you have to do, like pave your street or paint my house.
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p>BTW, if your neighbor had never actually taken the money would you still make him mow your lawn?
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p>RE: your credit union comment… credit unions do not pay taxes as do banks and they don’t have to participate in community reinvestment as do banks. That is because they are supposed to represent a “community of interest” such as an employer or a group of like individuals. This common group held their money much the same as a mutual bank is owned by their depositors, only in a more closely held group. Since the community of interest can be geographic now, don’t you think they should play by the same rules?
You’re telling me that the banks in question could not say no to the bailout money. I do not believe that.
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p>If your neighbor had never taken the money, of course he wouldn’t have to mow your lawn. Are you claiming that the government is trying to tie up banks that never took bailout money with those strings?
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p>Please explain to me how banks “have to participate in community reinvestment.” I am not an expert on banking. Are there legal requirements that banks loan out money in their community? Credit unions also make loans. Are their loans somehow not as valued?
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p>Do I think credit unions should play by the same rules as banks? Not if those rules result in anything like the typical behavior of the banks I’ve had the misfortune to deal with.
My friend would have to say he needs my money (or I am strongly encouraging him or forcing him to take my money) which he does but then decides he doesn’t ned it after all. If you want to complain about anything it would be that my friend took my money for a few months so I couldn’t use it for other things. We had plenty of TARP money left so banks did not take money we could have used in other places.
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p>Get over it.
Go take out a loan at a bank, payable in one year. Then pay the money back six months early. Do you imagine that the bank will excuse the interest you agreed to pay?
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p>Just what is it that you think I should “get over?”
off early and saving a boatload of interest. My mortgage company seems to have no problem with me “paying back the loan early”!
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p>Let me ask you this… why do you want banks to not pay back the money they borrowed from us? Do you want government control over the bank? Are you afraid they will pa bank executives large bonuses if the government loses their grip? What exactly is your beef?
Why do you think I don’t want the banks to pay back the money? Did I write that anywhere? My ‘beef’ is that the banks are trying to weasel out of conditions they agreed to. If you tried that with your mortgage, do you think the bank would go along? I’m not talking about early payback in either case – I’m talking about them (or you) agreeing to a set of conditions, then not honoring them. If they won’t let you do it, why should we let them do it? Because they’re too big?
I’m with you about maintaining conditions that they agreed to. I believe that credo across the board, whether in regards to the TARP recipients, mortgagees, social program recipients, law breakers, “prom drinkers”, third world nation borrowers and on and on… If you make a deal then you stick to the deal or suffer the consequences (foreclosure, prison, divorce…). Maybe these banks are showing symptoms of our society which has taken on the attitude of “I don’t like what I agreed to so let’s change the agreement” or “I (now) don’t think terms of my contract are fair (ARM rates, sentencing laws, “agree not to drink at prom or won’t be able to graduate with class”) so I want to change them.
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p>My only caveat would be if banks were strong armed to take TARP money and now live with conditions that are changing then I can actually agree with them wanting out of the deal… but only if they pay our money back.
These are banks, not thugs from DOT.
let them. Good for us and good for America. Regardless of how much lmaonnaise and lollerskates you’re dropping and the irony of this that and the other, this bailout isn’t some awesomely cool thing we want to go longer than it needs to.
They took the money. They made the deal. They don’t get to just “give it back”. There were transaction costs, there is the lost interest value of the money, there’s the issue of who owned the risk during that time period. That ain’t free.
But I have exactly zero patience for bankers who, having saved their hides with taxpayer $$$ that came with strings attached, now don’t like the terms. They knew the terms. If they didn’t like the terms, they shouldn’t have taken the money. Period.
I understand. I feel the same way about some of the big banks and the mortgage companies, and I know that some had their hands out since the beginning. But some of these banks never actually received money. They were told that they were qualified and approved but have never drawn down any TARP money as it isn’t feasible to do so. And as has been pointed out, there were banks that were told to take the money. Since they have yet to receive or spend this money, some banks want out of the deal as they are worried this might not be a good deal for them.
They never took any money, and they don’t want to, so that’s it- right?
the terms have changed several times and may change again. Imagine taking out a 30 year fixed rate mortgage (a real one, not some of the fraud that was out there) and then a month later the lender calls and says — by the way, we are changing the interest rate from 5 percent to 7 percent and we decided that you that the house you bought has to be painted red with white shutters. Oh, and next month maybe we’ll tell you that you can’t use any of the money to make any home improvements, and that when we said red with white shutters we really mean white with red shutters. And by the way, all of these things are legally binding and we may change our minds again and you have no recourse against us.
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p>This is essentially what happened with these programs. Healthy banks, including smaller and medium-sized ones were encouraged by their regulators to take the government investment. Then Congress changed the terms, and then they changed them again, and they’re working on changing them yet again, and they could change them five more times this year alone.
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p>Rep. Bosley’s post is absolutely on the mark. Let them pay the money back on acceptable terms and be done with it.
Who gets to say what acceptable terms are?
what acceptable terms are. Everyone who took the money has already made at least one, possibly two dividend payments. Take the amount they got originally, factor in any transaction costs to the government, plus make sure the bank has paid up all the required dividend and there you have it. There really isn’t any reason to be punitive about it, and if you start to charge additional fees, penalties, etc, you’re only taking more money out of the economy at a time when everyone is telling these banks to lend more.
It’s more like a credit card, complete with fine print. We’re all encouraged to have credit cards. We get one, with a 9.9%, $25 late fees, 25 day grace period, and 1% cash back. Then within a year, the rate has gone to 12.9% and then 18.9%, the late fee is now $45, and the grace period is 15 days.
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p>Sound familiar?
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p>The banks did not have to take the money, and the banks knew the terms could change. Come on — bank managing boards aren’t 4th graders… they’re quite good at saying no to deals they don’t like and they’ve got plenty of lawyers to understand just how contracts may change in the future.
With a credit card, you’re given notice of any changes prior to them taking effect and you can cancel your credit card at any time — just pay off the balance under the old terms. Unfortunately, Congress and the administration are changing the terms frequently and immediately, and it seems like people here don’t want to give these institutions the same rights.
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p>Some banks actually were essentially forced to take the money — the 10 largest institutions that were mentioned in another comment were pretty much forced by Paulson, et al to take the capital injection last fall. This was after the original TARP plan to purchase troubled/toxic assets was scrapped by the Bush administration and several of the EU countries decided to do direct capital injections instead.
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p>You also have to remember that this program was created before the huge public outcry (absolutely justified) about bonuses at Merrill Lynch, AIG, etc. There were some executive compensation provisions in the original TARP legislation, but nothing near where Congress is now heading.
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p>I think at the time (which seems like eons ago), bankers that were interested in accessing the funds to expand their lending, expand their businesses, etc were wary, but they were getting told by Treasury and their regulators that this was a good deal and that they should take it. The vast majority said no, but some said yes with the hope that the government would stick close to the original requirements.
a little perspective (and I’ll admit bias since I’m getting this from my brother who works for Wells Fargo). Back in October, Paulsen brought the group of 10 in and told them that they were all to take TARP money to demonstrate onfidence in the system. Some of the CEOs objected (not because they were afraid of paycaps et al, but that they didn’t need the money and were in OK shape) but were told in effect take this money now or don’t come to us the future if you’re having problems.
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p>WF is in good shape. They didn’t get into the silly stuff of crap mortgages during this decade (in fact they lost market share, which looks pretty prescient at this point) because they saw that it made no sense. If they want to give the money back (which is what they want to do), let them.
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p>And a word for the wise: if you’re at all adventurous, their stock wouldn’t be the worst thing to pick up right now.
WF had two choices: (1) take the money now, or (2) don’t get any later. They certainly could have decided that they didn’t need any now or later and told Paulsen to go screw. They didn’t — they bought the insurance now that they might need help later.
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p>Now, it’s time to pay back, on the terms of the deal.
for all banks to participate, in order to avoid instant stigma for the few that actually needed it, which would have been counter-productive.
The commercial banks, auto companies, parts suppliers, wall street investment banks, homeowners underwater all have been given bailouts.
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p>May as well keep asking for stuff from the Federal government until it says no.
Some people were against the bailout for exactly this reason. And now, some of the people who took our money want to return it, they are being told they can’t.
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p>Yet another reason why government cannot be involved in business. I’d say stay away from the business/financial world and stick to what you do best “aka governing” but that wouldn’t apply either.
I remember hearing politicians promise this, but is it actually occurring? Are mortgages being renegotiated? Have some foreclosures been avoided by government intervention?
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p>There are three pieces of information that will (or ought to) turn you around on this issue:
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p>- Hank Paulson is a complete idiot. Quite possibly dumber than Douglas Feith.
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p>- Hank Paulson forced many banks, regardless of their underlying situation, to take the money. Yes… in effect, he held a gun to their heads. He did this with the nine biggest and used their capitulation to bully the smaller banks.
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p>- Not all banks, nor all bankers, are venal idiots. There remain some stolid boring bankers that hearken back to the days of yore, when bankers all shared a deep-seated aversion to risk. Yet Paulson treated the whole sector as though it were a TB ward.
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p>Yeah… did I mention how Hank Paulson is a complete and utter moron? Think of the stupidest person you, personally, know. Then put them in charge of the financial markets. Paulson, on his best day, coudln’t do half the job that your idiot could… Yeah. It’s that bad.
They did? All of them? Remind me why the existence of credit unions was mandated, please.
and I’m not buying it. That the banks weren’t allowed to negotiate the terms doesn’t make it forced — hell, I can’t negotiate the terms on my purchase of a box of Rice Krispies. Take it or leave it.
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p>If anybody is good at saying no, it’s a bank. They all had two choices — partner with Uncle Sam, or go it alone. They all decided they’d rather partner with Uncle Sam, even if it isn’t a perfect partnership.
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p>I just have a hard time believing that banks don’t know how to say no.
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p>2. Sorry, but this “had no choice” meme is ridiculous. Of course they could have said “no.” These are the chairs of the biggest financial companies in the world, for God’s sake. They chose to do what Paulson wanted. What was he going to do if they refused — have Secret Service come in and mow them down? Please.
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p>3. Maybe so. But it doesn’t change the fact that all bankers, venal idiots or not, knew what they were getting themselves into by taking TARP money. So, again, I have no sympathy.
is actually pretty close to the truth. At the time, the spin was that Treasury was giving money to the top 10 “healthy” banks to help jump start lending. Imagine if Bank A gets the funds, and Bank B refuses. What do you think happens to the stock price of Bank B when the rumors start flying around the NYSE that Bank B didn’t get the funds because they weren’t “healthy”. From a PR perspective, that would have been a disaster.
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p>And think of the competitive disadvantage to the banks that refused, particularly if the terms had remained as they were originally. Bank A takes relatively inexpensive government capital and Bank B doesn’t on principle. Bank A can use the funds to grow it’s business and compete against Bank B. Again, major shareholders of Bank B would be asking the CEO why he turned down the cheap capital and his response is what exactly?
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p>Finally, Hank Paulson isn’t an idiot, but he and his Treasury dept. did a terrible job of managing both the mechanics and the message behind this program. Paulson also isn’t a banker. He’s an investment banker. There’s a big difference.
Gosh, yeah, it would be terrible if the stock price of a major bank had declined rapidly since the beginning of this crisis! Oh, wait…
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p>As for Bank B’s CEO’s “response” to shareholders, how about “the money came with onerous strings attached, which I felt would constrain our ability to do business.” Sounds pretty good to me.
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p>Sorry, I just don’t buy this line of argument. If the banks didn’t want the conditions, they were entirely free to refuse TARP money, and let the free market chips fall where they may.
if things had worked out differently in the economy to this point. You’re an institutional investor, pension fund, mutual fund, etc and you own millions of shares of one of these banks that didn’t take the money. Say the economic problems weren’t as bad as they have been and my scenario plays out. Your investment was just hurt because the CEO didn’t want to take funds that someone else did. Now that bank is beating the hell out of the one you invested in.
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p>No one had a crystal ball when this was first proposed. Remember, the first 10 banks were called in to Paulson’s office way back in Oct (I think) of last year. The financial world hadn’t completely fallen apart at that point, though it was heading in that direction. This was supposed to help stop the bleeding before it got too bad. I completely agree it didn’t work.
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p>I’m still trying to figure out why everyone here has such a problem with them paying the money back early. Seems like a win-win to me: the taxpayers get their money back and the banks get out of a program they no longer want to be a part of.
Wait – not taking money that is supposed to prop up failing banks is a sign that a bank is failing? Those dudes on the NYSE will apparently believe any weird rumor.
But I thought the terms of the bailout loans were so onerous that the banks that took them were effectively crippled, unable to do business. How is that a competitive advantage?
Does he wear shoes, or does he wear loafers?
David, you mentioned in the initial post a small bank in Virginia. You weren’t talking about the ten largest banks in the world. I suggest you talk to your local banker. You are right; no one was forced to take the TARP money. But when the federal government comes to you and suggests you take the TARP, and that is being given only to the banks that will survive, you are hard pressed to refuse. Especially if other banks are taking it in your business area.
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p>In addition, it has been the unspoken direction of the Treasury to reduce the number of banks in the US. This is not an official policy, but the feds have made it clear that they want larger banks capable of surviving in a fiscal downturn. If a bank is not well capitalized, it cannot survive. That made it hard for many banks to turn down money again, as other competitors were taking TARP.
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p>Banks survive on capital. Every bank that is offered capital especially at a time when major banks are shrinking lines of credit to smaller banks, you have to look at it. As the markets shrink, as they have over the past year, banks have been hit with the same pressures as the rest of us. As mortgage rates drop, banks are refinancing loans for less. Depositors may be up as people take money out of the market and place them in simple interest bearing savings account, but there is less money overall in the system. As I mentioned, FDIC recapitalization as well as Fannie and Freddie issuance of new stock has hit banks hard. Regulators are telling banks they have to write loans for less, but still maintain risk averse policies that inhibit the ability to loan money. Banks are under pressure and are hard pressed to accept TARP money, Could they reject it? Yes. Was this good policy? Not at the time given the pressures and finances of the banking industry and given that no one was certain where the market would fall to. Today we see a little light at the end of the tunnel. So banks are looking at federal policy where they want 4% mortgages, but want you to start paying this money back at 7% or so in the not so distant future. If you run the numbers out, you know that the cost of money will certainly increase over the course of a thirty year mortgage. Can you make the numbers work by giving out low interest mortgages if you have to pay this back in a time certain given uncertain future money costs? No. So banks are reversing their decision. Most banks are not whining about this. (Again, I mean the smaller coops and mutuals or even the midsized commercial banks in Massachusetts, not the largest ten banks in the world.) Were banks forced to take the money? No one held a gun to their head, but many felt forced by a federal policy that said you should take it if you want to be considered a survivor.
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p>I am not sure what the problem is here. If banks don’t need federal money to survive and don’t want to take it, fine, let the market work as it should and use the federal money on something else.
Dan and David your both making valid points and really are not on opposite sides your just looking at it from opposite windows IMHO. The Tarp money and the way Hank Paulson pushed the first 250 Billion into the market had a number of problems. One was he was trying to flood the market fast with capitol at the same time he was letting treasury and FDIC demand higher reserves to cover potential as well as real loses. Basically what one hand giveth the other taketh away, a no win situation. He also was trying to protect the big 6 Banks and we have all seen their names in these blogs from what actually happened and that was Short selling because their balance sheets were out of balance by forcing the TARP out to more banks he was hoping to mask who was in trouble with those that were not.
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p>OK the other fact is most local and regional banks in Massachusetts are solid I can not say the same for some in the Hot spots like Florida and California and more every day int he Mid West and Northern States that are racked with high unemployment. You can just Google FDIC takeovers and they are averaging still 1-2 per week. Much of this is not sub prime issue but some is a result of the Fannie and Freddie reset. But many of these banks were never offered TARP money. You would wonder how they would have handled the offer had it been made. We will never know.
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p>Last issue and Rep Bosley is 100% correct. The need for new game rules is critical especially for banks they need to know what is down the road since so much of what they do is tied to rules and regulations that dictate the results and the future of their lending. I have posted that my objection and concern with Hank Paulson and Tim Geithner was they have put the horse before the cart. Simply put we had a lose in confidence in investment vehicles they could be the infamous CDO’s or CDS’s or straight Sub Prime loans, or even Credit Card and Student loans that began to see higher and higher defaults. As investors felt the risks were increasing they began to slow the investment process this put more pressure on Corp and municipal bonds such as state and local community borrowing which resulted in the condition of the markets being frozen or simply out of Cash. This then bled in to all forms of lending. as a result the ability of banks to maintain the day in and day out loan process that is the means for them to make money they were suddenly faced with having to spend down capitol on operation. A scenario they are not built to handle. Remember the widget they make is called a loan their overhead is paid out of the interest payments and the profit goes to investors and is rolled into new loans and the process repeats day in and day out. Once the blood stopped flowing much like our bodies the system experienced a heart attack and need to be revived. But investors scared that the patient may not be what they once were are afraid to re enter the markets. This is where my blood boils with Washington the Need to set the new Rules of the game and stick with them. We still have not seen them they are flying by the seat of their pants and the system is going to limp along IMHO until they do and if they delay to long the system is going to return to a tailspin.
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p>Add in the fact that left completely off the table was a real plan to how to pay this all off. The Obama Plan (I am a democrat and a supporter) is Smoke and mirrors. Steven Orzack should be ashamed of him self and Lawrence Summers well lets send him to China please! The plan is only possible if beginning in 2011 we have 4% annual growth and it continues for 10 years LOL let me repeat the only way we can pay off this Sub Prime loan we have sold tot he Chinese is if we have a bigger boom for a longer period then in the RECORD setting one we had in the Clinton years.
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p>I can not say loudly enough we need regulations to establish the game players will come back albeit slowly but they will if they know the rules. Second we are fooling no one in the world with our plan to pay down this debt and thus we are looking like a High Risk Patient at the very best. So lets keep bailing out AIG and Citi and BofA instead of providing stimulus into R&D and manufacturing so we have something to sell to the world so we have a shot of earning our way out of this the 787 Billion in stimulus is 80% float to the states to try and keep their budgets in balance it has little to do with stimulating growth or rebuilding infrastructure to be able to provide for growth when in begins. SMOKE AND MIRRORS and we are going to be left holding the EMPTY BAG!
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p>Geithner I would give 30 days to come up with a real set of rules and be done with it or be done with him. and not another dime for AIG or a bank except to FDIC to take them over and break them up. If their is one thing any economist with a GPA of 1.0 or higher should have learned that we were screwed by the to big to fail institutions the Bushys wanted more of oh my god where would we be then if they had their way down the toilet.
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p>As Usual just my Opinion
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p>No. He’s pretty fricken dumb. Probably corrupt, too…
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p>
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p>Anybody can say no to anything, at any time. Doesn’t mean that saying ‘no’ makes any sense. With LIBOR not easing in a long long time, and the government strongly hinting that you take the money or go down with everybody else, saying ‘no’ might not be as easy as you’d like… That’s the fiscal equivalent of a gun to your head.
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p>F’rinstance, BMG recently placed limits (for the first time) on daily number of posts. This is done in an understandable effort to curb spam. But you could have said ‘no’ to that. There was no real requirement to say ‘yes’. But you chose ‘yes’ because the alternative was altogether to unpalatable. Why is it that the bankers don’t have this option? Many bankers faced, on the one hand, extreme pressure from the government, and nothing, on the other hand, but a swirling melange of uncertainty and chaos, only now with the forces of government arrayed against you… Can you honestly say that, were you in charge of these banks, you’d have said ‘no’. I cannot honestly say that.
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p>And, furthermore, now that a new regime is in place, with the decidedly more stable and intelligent Tim Geithner in charge, why would you not want to get out of the bad deal you were forced into by the previous regime?
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p>
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p>That you have no sympathy has been amply demonstrated. Lack of sympathy doesn’t, however, entitle you to correct judgement and a concommitant rage that has no place in the argument.
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p>I repeat, not all bankers are venal or dumb, nor are they all, as a class, responsible for the state we’re in. That you wish to make them out in one lump criminality, and treat them all according to one set of rules, is, not to put too fine a point on it, wrong. In this respect, there is little difference between your approach of ‘hang ’em all’ and that taken by Henry Paulson (make them all take the money…)
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