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Bloomberg: Getting TARP Funds Means Strings Attached. Really?!

 

Bloomberg just ran the following headline: Banks Grabbing TARP May Find Cash Comes With Long-Lasting Strings Attached.

Really? You mean banks get billions with no questions asked but then must cooperate with financing terms later on? What a gyp. Excerpts below:

…As financial firms race against a Dec. 31 deadline to become eligible for federal funds, they must decide if they can live with rules allowing the U.S. to “unilaterally amend” any part of its Troubled Asset Relief Program securities-purchase agreement. Bank officers and trade groups asked the government to delete the “open-ended obligation,” said Mark Tenhundfeld, regulatory-policy director at the American Bankers Association.

…The government could increase the dividend it’s being paid for preferred shares, require caps on executive compensation or force banks to halt foreclosures.

…At least 148 regional lenders received preliminary approval for more than $61.7 billion in TARP funds, according to data compiled by Bloomberg. Another $13.4 billion may be doled out to 45 other companies.

…Under TARP, the government set aside $250 billion to recapitalize banks. It allocated $125 billion to nine larger firms, then invited banks, lenders, and any other company that could claim bank or savings and loan status to apply for the balance.

…the government wants to avoid facing lawsuits as it did amid the savings and loan crisis of the 1980’s. More than 120 lawsuits were spawned by a 1989 law that wiped out the value of a paper asset known as supervisory goodwill, sending many savings and loans into insolvency. The government won most of the suits, and fewer than 20 are still active.

 

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