Treasury to Banks: Pay Back TARP Now
Color me skeptical this is happening anytime soon:
“Concluding that some of the nation’s biggest banks are in good enough shape to raise capital from private investors, senior Treasury officials would like more of them to repay billions of dollars in taxpayer money that bailed them out over the last year.
But many of those banks would prefer to keep the money for several more years rather than raise new money and dilute their existing stockholders.
Ten big financial institutions repaid nearly $70 billion in June. But the Treasury said at least several other major financial firms were strong enough to follow suit, and they were debating whether federal bank regulators should send a signal encouraging them to do so.”
As we have discussed previously, there are still big write-downs coming in commercial real estate, home mortgages and credit cards defaults.
Big. Write-downs. Coming.
TARP repayment at this moment might be a tad too optimistic and premature for many banks.
On the other hand, this rally ain’t gonna last forever. If your stock is up 40, 50 even 60%, now might be an advantageous time to raise a few billion dollars.
As any smart farmer will tell you, the time to make hay is when the sun is shining . . .
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Source:
Calling on Big Banks to Repay Bailout Now
EDMUND L. ANDREWS
NYT, October 14, 2009
http://www.nytimes.com/2009/10/15/business/15tarp.html
October 15th, 2009 at 7:24 am
Proof is in the pudding. If we are going to have to keep listening to BB, Timmy and Summer brag about saving the banking system. And listen to GS and the other banks tell us why all those leeches who produce nothing deserve their collective billions in bonuses, let them survive on their own. There should also be an unwinding of all the Fed’s loans against crap on the bank’s balance sheets.
That will provide a much better climate for discussion of financial reform.
October 15th, 2009 at 8:48 am
CRE big writedowns for sure. Everywhere I look there are empty commercial buildings and they’ve been this way for at least 6 months some of them 18-24 months. No one in the northeast seems to be expanding their business and understandably so. In fact I’m seeing the re-emergence of further cost cutting at the Fortune 500 companies I service.
October 15th, 2009 at 10:04 am
Considering the conspiracy theory (which seems to have some backing) that all of the tarp money went to buy Treasuries, then this doesn’t bode well for the treasuries when they start to unwind their positions.
October 15th, 2009 at 10:12 am
A bit of a tangent here but any theories as to why Commercial Credit has had virtually no media coverage over the last year (Big Picture excluded of course).
Barry do you have any thoughts?
October 15th, 2009 at 10:37 am
I’m not a banker, but I constantly hear that the banks “pay out half of their revenues in the form of bonuses.” Knowing a bit about accounting though, I realize that companies are required to keep bad debt reserves on hand. Enough to cover the actual losses and then some. So either these banks have sufficient reserves to cover the losses, in which case they can start paying back TARP and don’t need to have TARP money set aside for a rainy day, or they have insufficient reserves, in which case A) they’re in trouble and the CPAs and company officers need to have their licenses revoked or be fined or go to jail for signing off on the financials, and B) they probably shouldn’t be paying out as much in bonuses until they have adequate reserves.
Does this logic work, or am I missing something?
October 15th, 2009 at 11:14 am
Stop abusing women and the unborn with the dollar.
The Fed prints dollars that are used for abortions, not only here and abroad, but everywhere else as well; I am therefore no longer using the dollar and I encourage you to forgo the abortionist’s tools as well.
Go get a debit card from a company that hasn’t suffered from the onerous caps and controls imposed by the Obama / Clinton / Carter Nobel triangle which is actually making credit more expensive (The credit card companies want credit to be less expensive, don’t you see that?)
Once the the dollar goes to zero, then we will have no more gov’t sanctioned abortion …and doctors should be free to make the decisions they want, between them and the patient of their choice.
Stop the Obama / Clinton/ Carter Nobel Death Panels
October 15th, 2009 at 11:45 am
Extend and pretend is the marching orders. Did I miss something or is mark-to-market on all those bad loans piled up in the back of the broom closet now mandatory?