Monday, April 20, 2009

TARP: A Socialist Foot in the Door?

You think it was BofA's earnings that tanked the market today? Wrong. It was this. Kudlow has it right. This is an oncoming disaster. Even though they signed the term sheets, some banks have a plausible case that they were coerced into taking TARP funds. JPM and WFC at least - Kovacevich was even reported in media as asking Treasury Secretary Paulson "why is this necessary?" If I were Wells Fargo (after I run out the string on diplomacy with the feds, which would include a call to Dear Leader from Warren Buffett) I'd sue. Given the coercive nature of the investment and the many retroactive conditions, a bank ought to make a plausible case that they should, at least, be able to pay back the money.

UPDATE: The good news is that anything that comes out of this White House or, by proxy, Sec. Geithner stands a very good chance of being totally contradicted and countermanded in the near future. For instance, just a few short weeks ago, China was a currency manipulator. Magically, today not so much. Here's hoping the TARP money will be happily accepted back from healthy institutions in short order.


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