I'm VERY glad that Bennett was taken out, since he was originally elected
claiming that the three-term senator he ran against had been in Washington too
long, while promising that if elected he would serve only two terms.Once he arrived, Bennett's ego grew to the point that he felt he was too
valuable for Utah to lose. He broke his promise, and we finally tossed the liar
out in the convention when he was demanding we elect him to a FOURTH term!We replaced him with one of the most conservative senators elected in
decades. Mike Lee is one of the main faces and voices of the Tea Party and
I'm very proud to have him represent Utah.Saying that TARP (and
the bailout guarantee it provides the TBTF banks) was a good idea is like the
old saying "So other than that, how was the play Mrs. Lincoln?" The TBTF
banks should have been broken up, and Glass-Stegall should have been reinstated.
There's no reason that Goldman Sachs etc. should be considered commercial
banks and given access to the Fed's discount window. TARP set the
foundation for the next financial meltdown.
There are only Two major problems with the rosy scenario presented in this
incomplete headline:1) The money that Bailout banks "pay
back" to the government comes predominantly from the government. In other
words, we pay them to pay us back.Here's how it works: By
keeping overnight lending rates between 0.00% and 0.25%, banks can borrow at
next to nothing and buy risk-free U.S. Treasury securities that yield a lot more
than their financing costs. The result is a "positive interest rate
spread" which is the basis for banks revenues and profits.Additionally, banks borrow more money by using their Treasury securities as
collateral for overnight and "term" loans. Then they use the cash they
borrow to buy more Treasuries. They do this over and over again to leverage
themselves, make "profits"; and "pay back" their TARP loans.2) The total bailout cost, even after AIG "paid back everything in
full with interest&"; is currently still $155.8 billion in the red as of
Dec 14th, which you can see at the ProPublica bailout tracking scorecards
Frank iCaucus,How did you get your URL past the DN censors?treasuries yield little more than the 25 bp fed funds rate you reference.
Even if they did, the treasury would be paying on those bonds, whether the banks
or China and Japan bought them.I have not checked it lately, but
have you looked at the SIGTARP report to congress? It gives the official
outlook for which TARP programs are profitable and which are not. The loses
from TARP come from the housing and auto bailouts, not the bank bailouts.
To "Mister J" actually it wasn't the stock brokers that got us into
this mess.It was the politicians over the past 80 years that have
built up the institutions that created this mess. Politicians created Frannie
Mae with the specific intent to make mortgages available to people with
marginally bad credit. This slowly expanded through years until Carter and
Clinton used it to force banks into making loans to people with bad credit.What you and your ilk fail to recognize is that the banks were following
the regulations that were given to them by the Politicians. Prior to all of the
rules, there were very few sub-prime loans. The more involved the politicians
have become, the greater the quantity of sub-prime loans.But lets
not forget that 3 months before Freddie and Fannie made it public that they were
in serious trouble, that the Politicians said that everything was fine.It has only been since the government backed off all of their rules that the
banks have been able to issue fewer sub-prime loans.
"If we exclude money given to the auto companies, TARP has been a money
maker for the government."--------------Hmmmm.
That's a very interesting (and revealing) sentence, if just a bit
ambiguous.Is the bottom line of that sentence that TARP has NOT been
a "money maker for the government" if the "money given to the auto
companies" is included? What that basically tells me that if we were to be
-honest- and include the money given to "bail out" the unions as well as
the banks. Then we're back in the red.It is also interesting
to note that it is the money given to the leftist unions (let's be honest
about why the auto companies needed to be "bailed out") rather than the
"evil", "dastardly" banks and other financial institutions who
still owe us money.There's many a lesson to be learned here.
re: RedShirt "If I want somebody to invest my money for me, I will call an
stock broker, not a politician."Wasn't listening to
Stockbrockers that got us into the TARP mess to begin with?p.s.
Kudos to Lds liberal for the Monty Python
Senator Bennett, over the years I have come to appreciate you more and more. I
was one of the few who felt very similar to you about the TARP from the
beginning on. I was more than stunned when you were "burned by [your] own
village idiots" as someone mentioned previously. I consider
myself an ultra-conservative fiscally, yet since 2008, I've espoused an
idea that most conservatives have yet to consider, let alone embrace. That is
that if the smart money is buying at the bottom of a cycle and selling at the
top, why shouldn't the government step in at the bottom of the very worst
crises, in a win-win situation...i.e. getting preferred stock and rock bottom
prices AND stabilizing the markets at the same time! A no-brainer I say. We
could pay down a very nice chunk of the national debt next time around if we did
it right. Of course that is the danger, that a market approach is used rather
than a socialistic bigger government approach.
Your vote for TARP was a key talking point for those who voted against you.
Sorry for the premature judgement.
@Redshirt- Does it matter? Of course the truth matters. You're
stubbornly refusing to acknowledge the truth about TARP and you're absurdly
blaming Bennett and others for unrelated bailouts which they opposed.TARP was a success. Not perfect, but a success. That some other unrelated
government programs have wasted taxpayer dollars (not a surprise to anyone)
doesn't change that fact in the slightest.
@ Blue... lets not to factor in forget World War II in which the economic
failure also was a huge lever in Hitler coming to power promising to get Germany
out of its economic malaise. Statements like we should have allowed a world
wide banking collapse are really quit frightening in that it indicates a
fundamental lack of understanding how the credit markets work, and how the FDIC
would have had to cover all those defunct accounts. Just the
failure of Bank of America would have cost the tax payers more money to cover
than the entire cost of TARP and associated programs. The one report I read
from the fed was about 3 trillion usd to cover the cost of just a single major
bank failure... and this would have been much more than one bank.And
to that all M&A plus startup lending would have been wiped out, short term
credit - airlines would have stopped flying in days - The implications are far
wider and scarier than anything the worst FoxNews could have made up.I am truly grateful some understood the risks, and held their noses as they
did the right thing.
To "Prodicus" does it matter who owes the $200 billion? Isn't a
loss still a loss?Just because you owe your parents $20000, does not
mean that you don't have any debt.If anything this speaks even
more of the incompetence of government. The lending banks they set up are so
incompetent at their job that after 4 years they have yet to do what most of the
private banks have done.
@goatesnotes You are missing some key elements to the debt crisis, the
wars Bush got us into in order to vindicate his fathers not going after Sadaam
when the troops were there. When he was elected I told my son to watch and see
if he didn't find some excuse valid or not to take us back into Iraq.
Trillions of dollars a month spent to further a wrong policy Obama was left
with. So look at the big picture instead of pecking at the edges.
TARP was a bailout and Bennett knows it. The deals that our government
officials gave these banks and insurance companies were WAY TOO GENEROUS. They
had driven themselves into the ground and our economy with them. So when we
parachuted in with billions of taxpayer dollars (and these taxpayer are our kids
not us) why didn't we get a better deal? These companies had no other
alternatives, so why didn't we fire all of the boards, or at least retain
the right to do so? Why didn't we retain the right to veto bonuses and
salaries? Why didn't we get more warrants? Why didn't the bond
holders have to take a haircut. Why were the interest rates so favorable?
It's all so disgusting.The deals given to these companies
allowed taxpayers to pay for the mistakes of the companies. This is not
capitalism, it's cronyism and will prove to be the ruin of our country.
Well the people who want no more bailouts and think TARP set a bad precedent
should want us to get rid of too-big-to-fail by making sure banks are no longer
that big. So how about reinstating the regulations we had in place for half a
century that kept them at bay (Glass-Steagall)? How about some good
old-fashioned trust-busting a la Teddy Roosevelt? We won't need any more
bailouts if banks aren't gigantic enough that their failure would
significantly harm the economy.
@RedShirt, you have just succeeded in proving Bennett right about opposition to
TARP being more often based on misconceptions than on reality. If you go back
and actually read the CNN piece you refer to, it will tell you that the billions
that are still owed are mostly from the Freddie Mae/Freddie Mac bailout, with
the rest of the shortfall coming from the auto bailout. Bennett opposed both of
those bailouts, neither of which has anything to do with TARP.It's true that some institutions tanked anyway (e.g. CIT), causing some
TARP investments to be written off as a loss, and some are still in the process
of repaying their TARP loans (e.g. Zions Bank). But any good investment involves
some risk and the facts unquestionably show that TARP turned a profit.
@Blue- well put, but remember, it wasn't the majority of Utah Republicans
who kicked Bennett out, it was extremists showing up in vastly disproportionate
numbers at the caucuses (with out-of-state organizations spending hundreds of
thousands of dollars to try to achieve that result). Polling showed that if
he'd made it to a primary election he likely would have won.So
when you say "let the Tea Party jerk you around," the ways mainstream
Utah Republicans let that happen were by not reforming our dysfunctional
caucus/convention system and by not showing up at the caucuses. At least this
year we avoided the latter problem.
To those of you who are trying to use this as a "look TARP turned a
profit" moment, you are wrong.See CNN "Taxpayers still owed
more than $200 billion from bailouts" Unless AIG paid more than $200
billion back, we are still.Also, since when is the US government
supposed to be using tax money for commercial investments? If I want somebody
to invest my money for me, I will call an stock broker, not a politician.
Goatesnotes: "And yes, I would have preferred a worldwide financial meltdown
as opposed to what we have inherited as the natural consequence of TARP and
everything that came afterward."Really? You'd prefer
global economic failure? 25% unemployment within developed nations? Widespread
disruptions of food production? Millions of Americans losing their homes?
Massive global political upheaval? Do you have some kind of
"Road Warrior" post-apocalypse fantasy in your head? I think you must,
because that's exactly what "worldwide financial meltdown" would
create.I swear, Democrats don't need to pay consultants to
devise strategies for running against Republicans - all that's required is
to just remind voters of what Republicans go around saying out loud.
We miss you, Senator Bennett. How refreshing to hear a politician say 'I
was wrong.' How encouraging to see someone privilege evidence over
Banks motto: private profits and public risk
Thanks, Senator, for the update. Unfortunately, the Republicans have turned TARP
into just another myth that they use to test for political purity. When will the
GOP come back to reality? Can't see it happening in the foreseeable future.
Screwdriver,There are still laws in place that prevent the merger of
different types of banks. Your classification of “consumer” banks
and “commercial” banks is unknown in the industry. Can you explain,
please, what types of banks you mean? Do you mean investment banks and
commercial banks?As evidenced by the debate over TAG extension,
dudd-frank failed miserably in its goal of ending too-big-to-fail.Actually, the TARP that passed the dem house and senate would have been a
miserable failure had not Paulson modified how the funds were used. The dem
congress said to buy the bad assets, though no price was established and there
was NO market. Paulson used the funds to invest in bank capital – which
has been / is being repaid with interest.Geithner is reducing the
profit the treasury could be making on TARP by converting the 5% – 9%
paying preferred stock to common, and then dumping it for less than treasury
paid for it. Geithner’s actions make no economic sense.Where
we will lose money from TARP is the housing and auto bailouts – beyond
Providing “for the common defense” is one of the primary reasons our
Founding Fathers ordained and established the Constitution. Moreover, they
clearly wanted the defense imperative to be unmistakable, so they put it in the
Constitution’s very first sentence, the Preamble. Later, in Article I,
Section 8, they gave Congress the power “to lay and collect taxes”
and “to borrow money on the credit of the United States” in order to
fulfill the imperatives.In short, we have gone far beyond the
original intent language, and we continue to gut the meanings based on
"modern contingencies" not foreseen as justification for unlimited
borrowing, advocated now by Geithner and Obama. The Founders told us to defend
America then told us how to pay for it (tax, and borrow on credit). Could the
founders have made it any clearer? Maybe, just maybe, if they’d said it
something like this: “The president and the Congress must defend this
country; to do that properly, Congress must maintain the country’s good
credit, and must tax and borrow as necessary.”Excessive debt
is an existential security threat to us.
As the debt ratio increases, the exchange value of the dollar may fall. Paying
back debt with cheaper currency could cause investors (including other
governments) to demand higher interest rates if they anticipate further dollar
depreciation. Paying higher interest rates could slow domestic U.S. growth.Higher debt increases interest payments on the debt, which already
exceed $430 billion annually, or about 15 cents of every tax dollar for 2008.
According to the CIA Factbook, nine countries have debt to GDP ratios over 100%
for 2010, the largest of which is Japan at approximately 197.5%.Further, a high public debt to GDP ratio may also slow economic growth.
Economists Carmen Reinhart and Kenneth Rogoff calculated that countries with
public debt above 90 percent of GDP grow by an average of 1.3 percentage points
per year slower than less indebted countries. The public debt-to-GDP ratio in
March 2010 is about 60 percent of GDP; CBO projects it will reach 90 percent
around 2020 under policies in place in 2010. If growth slows, all of the
economic challenges the United States faces will worsen.That's
why debt and deficits will kill America, Mr. Bennett.
Let the GOP witch-hunt of political purity continue.They will
continue to purge and burn any all so-called RINOs until they are extinct.Reminds me so much of the ignorant villagers in Monty Python's Holy
Grail."We did do the nose, and the hat...but she's still a
Witch!""She has got a wart."BURN her anyway!Sen. Bob Bennett was burned by his own village idiots.
Thanks, Sen. Bennett, for an informative article. I'm no economic whiz, so
I particularly appreciated the paragraph below: "The details of
TARP were not widely understood and it was widely opposed. Those leaders who did
understand how serious the problem was, and how well TARP was designed to deal
with them, did the right thing and moved ahead anyway."This is
exactly how a republican form of government should work. Leaders must work hard
to understand the issues, then make the best decision, regardless of politics
and polls. By the way, I think the media have done a poor job of
telling us how successful TARP has been.
Senator Bennett's between the line message - I told you so. And I agree,
Sen. Bennett you were right. We should have listened.As a state
delegate I held Mr. Bennett, a member of the banking committee, responsible for
failing to recognize the risks derivative trading posed to the country's
financial sector. 700 billion in loans was enormous. Hank Paulson admitted he
didn't know how much he needed so he just said 700 B because that was a
lot. I was shocked by the apparent recklessness. However, I will now eat crow
if the bailout was not a bailout at all, but a short-term stabilizing loan.
There were no socializing losses and privatizing profits. Unfortunately the consequence, as mentioned above, is new stimulus and TARP
step-children every year. Is this article an explanation for why
so few people went to jail for the collapse.
"The debt and deficits designed to provide stimulus to the economy have
proven to be disastrous, and have only delayed the economic recovery."I have seen this talking point so often - minus any facts to support it
- it has become silly.@Goatsnotes.... ok... provide some study
that details how a global banking lending meltdown would have been a better
solution to what was done. Anything. Show us all how cutting off credit to
most every business, would have been better. How having no working capital
would have provided a better solution. How in the world was this worse then the
great depression where financial systems did fail.... show us all how this was
a worse outcome... please.
We need more Senator Bennetts. Unfortunately, it won't happen. At least
not in the current GOP.
"Utah Republicans, you could have had Mr. Bennett, as solid a conservative
as you'll ever hope to see, representing you in the Senate."Ah, to many Bennett and conservative are mutually exclusive of each other
because he was open to that radical concept promoted by out founding fathers -
compromise. Despite the fact that TARP has been successful - what is missing
from this opinion piece is that FIAT has announced they will buy more Chrysler
stock. It was a program started by a republican, and implemented by
a Democrat. And it worked. Who would have thought.
What Bennett fails to acknowledge (and always did as a sitting Senator), is the
debilitating precedent TARP established when the government was allowed to begin
picking winners and losers. At the time I warned what would ensue when
government could continue to be more oppressive and more omnipresent in every
facet of our society, and now we see the fruition of the dangerous trajectory
that began with TARP. He's right, both parties participated, and so it is -
those who favor big government solutions to everything in what was once a free
market economy have now achieved their aims.And yes, I would have
preferred a worldwide financial meltdown as opposed to what we have inherited as
the natural consequence of TARP and everything that came afterward. The debt and
deficits designed to provide stimulus to the economy have proven to be
disastrous, and have only delayed the economic recovery. Keynes was wrong. I
believe in optimism, but hailing TARP as a success as he does in this article
speaks volumes about why Bob Bennett is now sitting on the outside of Washington
looking in. He will find no justification for his defeat by claiming
victory for TARP.
Utah Republicans, you could have had Mr. Bennett, as solid a conservative as
you'll ever hope to see, representing you in the Senate.But no.
You let the Tea Party jerk you around and now we're all stuck with that
monumental embarrassment, Mike Lee, who is making a name for himself by being
simultaneously doctrinaire and breathtakingly incompetent.
I appreciate Mr. Bennett's honesty in this matter. I wish more people in
Washington were 'pragmatic' in their assessments, as Bennett appears
to be on this issue.
Unfortunately, some will greet any news regarding govt. success as failure when
seen through a different lens. They want no evidence. Only talking points.
I guess sometimes SOCIALISM can be very profitable.Does that make up
for the Solyndra?
Mr. Bennett, we miss you; why can't other Utahn Congressman be positive
and cheerful? The government, just like business, makes money; nothing wrong
Those that opposed TARP should at least be in favor of going back to limiting
consumer and commercial banks from merging. Commercial banks can take as much
risk as they want - with their own money and no planned or unplanned government
backing.But governing banks seems to be a one party ideal now.