July 9, 2009
Now Elizabeth Warren and the C.O.P is piling on:
The Congressional Oversight Panel, which is charged with overseeing the Troubled Asset Relief Program, or TARP, said in a report that a group of 11 small banks that have repurchased government warrants in exchange for taxpayer-funded assistance, have bought-out the stakes at 66% of their face value.
The report argues that liquidity discounts are a key factor for why the warrants were purchased at such low prices. Should a similar discount be a major factor for warrant repurchases at larger institutions buying out government stakes, the shortfall to taxpayers could be as much as $2.1 billion, the report said.
The report said the C.O.P. is exploring the possibility that Treasury consider selling the TARP warrants in an open, public auction, as an alternative that could possibly give taxpayers a better valuation for the stakes.
“This has the benefit of stopping any speculation about whether Treasury has been too tough or too easy on the banks that want to repurchase their own warrants. It also permits the banks to bid for their own warrants — in direct competition with outsiders,” the report said.
This open market is the same thing Simon Johnson and others have been advocating. I hope everyone continues applying pressure. It’s not too late to change the approach.
July 2, 2009
The Treasury’s plan for selling back TARP warrants was announced last weekend, and it looks bad.
Simon Johnson gets pretty close to calling it corrupt, and he is right: Even if individuals have the best intentions, a poorly laid system will corrupt them. This is such a system.
If Obama goes through with it he will be making a big mistake: Giving Republicans amunition for the midterms and opening his administration to accusations of favoritism and backroom dealing, all while they could be getting a meaningful return and hoisting it as proof that the bank bailout was not all just a huge waste.
June 10, 2009
Tonight’s (6/9) episode of Jim Lehrer’s Newshour was outstanding. It really gave me hope that not all journalism on TV is dead.
Paul Salmon explained bank balance sheets and TARP in a way that a middle schooler could understand, with an assist from Simon Johnson and Chris Whelan. You couldn’t ask for more professional help.
Then William Cohan (the guy that wrote the best-seller on the crisis) shed light on today’s TARP payback, with an old Treasury official giving a great counterpoint, which actually made a lot of sense (hmm, maybe changing mark-to-market is not such a farce after all).
Bonus: A great piece on the electrical transmission lines we’ll need to transport wind and solar to the cities.
If you’ve never watched the show I really urge you to. If you can get past the not-quite-so-snazzy graphics and sound effects, and normal-looking journalist (as opposed to shallow celebrity anchors) you will get more information in 60 minutes than you could from watching any cable news network all day (actually fair and balanced to boot).
You won’t miss the shouting matches, I promise.