Let The Great Ripoff Begin
December 17, 2008 – 8:13 pmThe plunge protection team and President Bush today kicked off the greatest ripoff in your lifetime. High on pork and drunk on rum, the TARP has been thrown over nine American banks, taking $125B among them.
Nine of the country’s biggest banks have signed on so far (the tally: $25 billion for Citigroup, JP Morgan Chase and Bank of America; $10 billion for Goldman Sachs and Morgan Stanley; between $2 billion and $3 billion for Bank of New York Mellon and State Street).
Participation in the program is technically voluntary, but the first banks in the deal were given an offer they couldn’t refuse: The banks “had little choice in the matter,” says the Washington Post.
Bullied though they may have been, the government’s intrusion in the banks’ day-to-day operations will still be relatively light
Since when do you have to bully insolvent banks to take money?
Treasury Secretary Hank Paulson exhorted the banks this morning not to “hoard” this new capital, “but to deploy it.” However, there is no “specific contractual guarantee” that the banks do that, reports the Post.
Now there is a line for public consumption if ever there was one. Here’s another:
Furthermore, there will be some limits on executive compensation, but the jobs of the executives at the participating banks seem secure. Speaking this morning, Paulson said, “Institutions that sell shares to the government will accept restrictions on executive compensation, including a clawback provision and a ban on golden parachutes during the period that Treasury holds equity issued through this program.”
That is akin to putting a blind fold on a blind man in a dark room. Executive compensation went the way of the bull market when the credit bubble burst. Would have been a great idea in 2003, but thanks again Hank!
<>
