Any bank that takes TARP (American’s money) funds is either a beggar man or thief (most likely both).
Hostility? As a taxpayer, I find your condescending arrogance completely bracing -if typical.
Fact is, Wall Street and its enablers in .gov are leeches that have brought this country to its knees.
The old parasitic regimes on WS should have been allowed to FAIL. We could charter 10 new clean banks with the fear of god and taxpayer/investor confidence in place on day one.
These days I pray for a bond market dislocation.
Between the Big Banks leeching and Obama’s impending Scamulus Plan my children WILL be debt slaves in their own country regardless of frugality.

and Roc………….. FUCK OFF ………..you entitled leech.

2. The amount of net transaction accounts subject to a reserve requirement ratio of zero percent (the “exemption amount”) is adjusted each year by statute. The exemption amount is adjusted upward by 80 percent of the previous year’s (June 30 to June 30) rate of increase in total reservable liabilities at all depository institutions. No adjustment is made in the event of a decrease in such liabilities. Return to table

even ‘real bankers’ should 2x check something as important as the RRR every once in a while..

..Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities. Within limits specified by law, the Board of Governors has sole authority over changes in reserve requirements. Depository institutions must hold reserves in the form of vault cash or deposits with Federal Reserve Banks.

The dollar amount of a depository institution’s reserve requirement is determined by applying the reserve ratios specified in the Federal Reserve Board’s Regulation D to an institution’s reservable liabilities (see table of reserve requirements). Reservable liabilities consist of net transaction accounts, nonpersonal time deposits, and eurocurrency liabilities. Since December 27, 1990, nonpersonal time deposits and eurocurrency liabilities have had a reserve ratio of zero.

The reserve ratio on net transactions accounts depends on the amount of net transactions accounts at the depository institution. The Garn-St Germain Act of 1982 exempted the first $2 million of reservable liabilities from reserve requirements. This “exemption amount” is adjusted each year according to a formula specified by the act. The amount of net transaction accounts subject to a reserve requirement ratio of 3 percent was set under the Monetary Control Act of 1980 at $25 million. This “low-reserve tranche” is also adjusted each year (see table of low-reserve tranche amounts and exemption amounts since 1982). Net transaction accounts in excess of the low-reserve tranche are currently reservable at 10 percent.

‘low-reserve’ tranche limits, currently, U$D 44.4 MM

First – and this is important – The TARP money is a LOAN to banks. The interest is 5% payable to the Treasury and it is a preferred liability so, unless your bank is going out of business, they will get paid. The treasury is borrowing this money for almost nothing and loaning it out at 5%, not a bad spread when you get a first position plus warrants on the stock. This program will probably make a lot of money for the taxpayers. The biggest risk IMHO is a few of the very largest banks that still have questionable balance sheets with plenty of level 3 assets.

Second – TARP money is CAPITAL. Capital for a bank is much different than deposits. Real Banker above says the bank needs to loan at 9.5% to make the TARP work. He is right that the real cost of the money to the bank is about 7% but any smart bank will use this money to grow deposits (typically a multiple of 10-12 times capital) and turn $1 million of TARP capital into $10 million of deposits and $9 million of loans. Deposits are relatively cheap and you can get more if you raise your deposit interest rates. There is lots of money on the sidelines looking to be invested that could go into banks if they would pay more for deposits. Normally, a bank can get more capital by selling stock or borrowing in the capital markets. Neither is a good option right now so TARP is a reasonable option to grow deposits so you can make loans.

This program has been very poorly explained, and people misunderstand how it really works, but it will work and the government will get repaid. Goldman and Buffett are a whole different deal than your local community bank. As a bank, I would rather stay small and not lend than do Warren’s deal, but Goldman and GE were desperate at the time. (Notice now they are both banks and will be out getting deposits rather than depending on the money markets that are frozen.)

It’s a new world, but TARP to banks is probably the least of our problems.

Go look at one of the lists of which banks are getting TARP funds. So far, I think there are less than 200 out of about 6000 banks. Not every bank who applies is getting the funding, but of course no one is disclosing those banks who applied and were denied. Except for the largest dozen or so banks, who reportedly were forced to take the money so it wouldn’t be obvious who was in trouble, the other banks are mostly in pretty good shape and could have survived without the TARP.

Mostly I’ve heard that “the system would have collapsed” or something of that nature. What does that mean specifically? Supposedly the TARP was going to solve the problem except the TARP money has never been used as originally intended — so shouldn’t the system have collapsed by now?

To the point made earlier by b_thunder: something just plain stinks. It appears to have been a literal robbing of the US treasury in order to save Paulson’s buddies from market forces. (Is Hank ‘Butch’ and Ben ‘Sundance’ or the other way around?)

So the question remains whether a real global and societal catastrophe was imminent, or was TARP just a cover (that is, a tarp) for the negligence and malfeasance of Paulson’s pals?

The required dividend on the preferred is 5% after tax, or about 7.5% pre-tax. The best banks are earning about 2-3% net interest margin. So the hurdle rate will at least need to be 9.5%. Most people are not going to apply for a 9.5% loan. This high hurdle rate partially explains the reason why banks will merge instead of try to lend. It is much easier to earn a 9.5% return from a merger investment than try to lend out at 9.5%.

In other words this capital investment is incentive for banks to MERGE and to NOT lend.

“Communist Party” in Chinese translates roughly as “collective property party”. The idea of “communism” that we associate with China is a construction by that great China born propagandist Henry Luce. If you haven’t been to China, I recommend that every American go, travel around (on your own, mind you), go to a big city, into the countryside and observe. You will never think of China the same way again and your eyes will really be open about our country and form of government and economy.