Loan Program's Scarlet Letter ( Government will own only weak companies )

Wall Street Journal ^ | APRIL 30, 2009 | PETER EAVIS * HEARD ON THE STREET *

[Ernest_at_the_Beach]

As strong lenders move to shrug off taxpayer assistance, what happens to the financial firms that are left relying on government help?

So far, the Treasury has tried to avoid actions that would clearly label institutions as either weak or strong.

For instance, in the first round of Troubled Asset Relief Program investments, J.P. Morgan Chase got the same size preferred-equity injection as Citigroup, which was clearly ailing at the time.

And earlier this month, Treasury Secretary Timothy Geithner said it might be better for the economy and the financial system if some banks didn't pay their TARP investments back before others.

But there is one support program where it is hard to avoid such distinctions -- the Temporary Liquidity Guarantee Program, which allows financial firms to issue debt with a government guarantee. But there is no government obligation to issue under this.

[Ernest_at_the_Beach]

********************************EXCERPT*********************************

By at least one yardstick, GE Capital is already more reliant on TLGP than Bank of America. The $37.6 billion of TLGP debt it has issued is equivalent to 6% of assets, while Bank of America's $44 billion is only 2% of assets.

[April Lexington]

This is the crux of the scam. You take your over leveraged, poorly managed company and sell it to the Government. Ten, they get to lay everyone off and stiff the creditors. Heh, heh, heh.

[Oldexpat]

We need to boycott banks and companies that are owned by the Govt. No more GM or Chrysler vehicles.

[org.whodat]

Does not mean anything if you don't know what the federal reserve has advanced.

[Ernest_at_the_Beach]

Related thread:

Statement From Non-Tarp Lenders of Chrysler (Bondholders say Obama is trying to screw them)

[Ernest_at_the_Beach]

The Fed is much less interested in political control...so to speak...

[org.whodat]

You left out the question marks???????

I thought actions of the fed were open to the public, I was wrong!!!

[Ernest_at_the_Beach]

Update....FR Thread:

Obama says Chrysler to be stronger after bankruptcy

[Marine_Uncle]

"And earlier this month, Treasury Secretary Timothy Geithner said it might be better for the economy and the financial system if some banks didn't pay their TARP investments back before others."
And this guy is supposed to be heading the treasury department?

[SunkenCiv]

Thanks Ernest.