TARP

Troubled Asset Relief Program: The government forced Banks to take money for a crisis government created. Then blamed banks. Troubled Asset Relief Program: this was Government forcing Banks to take money, so they could comply with government regulations to make loans. All to get around a crisis that government (mostly Democrats) created. Then Democrats blamed the banks for taking the money, and used it as an excuse to put more regulations on the banks. ℹ️ Info           ~ Aristotle Sabouni

So the banking market froze up because of Government regulations causing a bigger drop than before, and requiring banks to sell their assets to keep liquidity high enough to comply with other regulations (so they couldn't loan). And they were scared a further drop would squeeze them more, so they didn't want to take on more liability.

• The quick/simple fix would have been repealing FAS 157 (which would have freed up assets) -- but that would have been publicized and shown that congress/government was wrong to pass it (and is what caused the problem in the first place). Since that Democrats wouldn't let that happen, instead of playing politics and publicly hammering Democrats to repeal FAS 157, while the economy collapsed around us, Bush pushed for a compromise: TARP.

• TARP (Troubled Asset Relief Program) was the Government FORCING banks to take massiveLOANS, to give them a HUGE buffer on their debt-to-equity ratios, so they could start loaning again. On top of that, there were only a few banks that were in trouble, but the Fed made ALL the banks take loans, so people didn't know which banks had the worst problems (and cause a run on those banks). But we know after the fact it mostly the investment banks (not the Unified Banks that G-S theory says should have the problems).

The important thing to remember is that TARP was just LOANS, not give-aways to the banks. Congress authorized more than they needed (to have head-room, in case there was a second wave), but they only loaned $414B out, and the banks pad back $405B (with interest). (Very little was lost).

🗒️ Note:

Technically, there's nuances to that. Increasing banks equity allows them to loan more, which is how they make money. So the banks did benefit with all that free / low-interest cash. But the reason was so they could loan money to the people. Anyone who claims "the pubic got stuck with the bill", "evil bankers got a bail-out", "the little guy got screwed", don't understand what happened, or are dishonest. Like Elizabeth Warren, Bernie Sanders or any of the far left movements that made this a talking point. They just preyed on the ignorance of their base, and mislead people for political profit.

We knew the housing market would find the new floor, once we figured out how much poison was in the system. And once the actual value of MBS's stabilized, the liquidity crunch abated, banks that survived, paid back the government ALL the loans from TARP. Only the few ruined by government regulations did not.

Banks weren't loaned money to benefit the banks/bankers: the money loaned was so they had credit to loan out TO THE PEOPLE! The public benefited, not the rich bankers, proven by the fact that the banks paid all those loans back.

Obama did pervert TARP, and diverted some of the money to Democrat causes: the auto-companies, Unions, and NOT the bankers or Wall St. And most of that money was NOT paid back. So the public did foot the bill of a few hundred billion in TARP. But not in Bush's Bank TARP (what it was passed as), only in Obama's DNC-Give-away TARP 2.0 (what he revised it into). If you've never heard that in the media, it shows you how biased or ignorant the media is.

So when people are screaming that we have a corrupt system because no bankers went to prison, it shows the failure of the media. No bankers went to prison, because there was no crimes you could convict them of, other than complying with the many bad government regulations that nearly destroyed them, and paying back the loans they were forced to take (but most didn’t need), to cover for the few that were most compliant with CRA and Governmental pressure. The real question is why didn't the many Democrat politicians get held accountable for their hand in it? The answer is because the media and Democrats (but I repeat myself), were more effective in blaming someone else for their mistakes. So Bush and Republicans bore the brunt of the hate of the ignorant masses, for something they had warned about and fought against.

Congress/Democrats knew that if they dug too deeply, all the systemic problems pointed back at them: so that's why they didn't hold big public investigations: Some banker was going to explain to the public what had really happened (instead of the Democrat version), and if they did that in ways that the media couldn't ignore, the Democrats in control knew they'd be in trouble. That's why despite Democrats controlling Senate, House and President, they only offered rhetoric -- but very thin "investigations" or prositions. Politicians might be dumb, but they're not THAT dumb.

---

🔗 More

Economics The study of choice, scarcity, Social reactions to policies, and unseen consequences.

Terms We need to agree on what terms mean. This used to be easy, before SJW's/Marxists started Orwelling our language.

Financial crisis of 2007-2008 What caused the financial crisis of 2007-2008? This explains various theories.

Financial crisis of 2007-2008 What caused the financial crisis of 2007-2008? This explains various theories.

Financial Terms These are a bunch of financial terms (concepts really), that you can scan to get familiar with the jargon and ideas.

🔗 Links

• Wikipedia:Troubled_Asset_Relief_Program

Tags: Economics  Terms  Crisis  Financial crisis of 2007-2008/all  Financial Terms