That’s what’s claimed in this article in the IBD. This becomes pretty thuggish when you add to the fact that these banks were (allegedly) outright threatened to take the TARP funds in the first place. The reason for all of this is to make the process as opaque as possible. The political establishment’s efforts at transparency thus far have been just a show to get elected and/or score political points. It’s obvious neither Obama nor Bush believed in it, so why should we expect it with the TARP funds?
The idea as I understand it is to make sure no one knows which banks needed the money so as to not cause a run on that bank. But that means the market doesn’t know which banks are good either and so rather than reward good banks it just waits the whole thing out. Now of course the gov’t can’t accept repayments because that would make it obvious that those banks that can’t pay back the money aren’t doing as well as those that can. This is a pretty clear refusal to let the market work ostensibly because it’s “broken”.
Now all this wouldn’t be as bad if it wasn’t the gov’t involved. Why? Because the gov’t interests are politics. You have people involved and now running things that aren’t looking out for the best of the company, nor the market, but for their best interests which are being popular. Combine that with the ignorance of the system or market and you get stuff like Maxine Walters’ crazy and conspiratorial questions. Combine that with grift and you get Chris Dodd and Barney Frank. So now with the gov’t involved we start seeing wild political demands on these banks with the full force of a hypocritically righteous rage. Limits on wage rates, specially targeted, punitive 90% taxes that go back on contracts, outright extralegal public threats to intimidate.
This is why it’s dangerous to deal with the government because the government has captured that industry and won’t give it back while it can still play with it (i.e. ruin it).
(edit to fix some atrocious spelling)
