Appalled In Greenwich Connecticut

StumblingonTruth.com ^ | January 26, 2010 | Clifford S. Asness

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[L]et’s discuss the President’s recent rhetoric. Paraphrasing him, “we will get back all the people’s money.” And the applause line, “every dime!” OK, fine. But most of the banks, and in particular the ones in the headlines for paying large bonuses, have paid back all their TARP loans. This logic causes him no pause. Apparently, and we must read between the lines as this is the most transparent administration ever, he means all the money lent out to everyone through TARP not just to banks. So, loans to the car companies, and AIG, and FNMA/FHLMC, all must be paid back, but by the banks, who already paid back their own loans. Makes sense. Has this administration seen a human activity they don’t instinctively wish to socialize?

Apparently, unlike GM, Chrysler, and the GSEs, the banks didn’t get the memo that said when you get a bailout the polite thing to do is to continue to fail.

An argument is often made that even if the banks paid their explicit debt back, they simply would not have survived without the loans. Thus, they owe the government much more than mere repayment. This is riddled with flaws:

• According to bailout alarmists nobody would have survived, neither man nor beast, without TARP, so why is this argument unique to the banks,

and again why are they paying back everyone’s debt just by virtue of their success?

Again, as in the Chrysler bankruptcy that drove me to a similar missive last year, the government is seeking to write ex post facto rules. It’s entirely possible that if during the dark days of the bailout the government told banks, "we get half your profits for the next two years," the banks would have signed the deal. No one asked.