For example, from the article:
"Nobody gave me anything. I am having to pay 6.4 percent as a preferred dividend to the government."
This bank went to the government and borrowed money at 6.4% interest. The government raised those funds by selling treasury bills at 1-2% depending on the length of the bills.
So, unless the bank goes out of business, taxpayers are making good money on this deal. It may not be normal for banks to borrow from the government, but the point of TARP was that banks were not able to borrow from other banks, so the government would step in and borrow money.
This is another case where TARP won't actually cost us 700 billion, and in fact could turn out to make the government money.
On the other hand, TARP was set up for banks that needed money and couldn't get it elsewhere, so it is a bit absurd for banks that COULD borrow elsewhere, or don't need the money at all, to take TARP just because it's there.
That's the problem with most "needs" programs, keeping people who don't need them from using them.
BTW, I love that companies that didn't take TARP are making it an issue, because that is one way to keep TARP from becoming generally accepted. I just don't want us at FR to mistakenly use terms like "giveaway" or "bailout" when it is nothing of the kind.
Well...those lovely company trips and other luxury add-ons from last fall’s ‘bailout’ prove your words correct. As to ‘bailout’ for those guys, it was NO bail out.
Even if they DO pay it back, (and considering the imminent economic uncertainty, will they?)borrowing, borrowing, borrowing is not the best path to economic stability.
That is strictly MY uneducated opinion.
You really got to hand it to the banks and financial institutions who DON’T “borrow” TARP funds.