April 22, 2009
The Diabolical Genius of TARP
David Weidner of www.Markewatch.com wrote a column regarding the issue of banks hoarding the TARP money and not passing it on to consumers in the form of loans. The title of Weidner’s column is “Your credit is no good here”, in which he makes the case of why banks need to pull back from lending.
In his column Weidner points out a strange dichotomy in the position of Bank of America CEO Ken Lewis who has been talking publicly about how they are lending as if the good times never ended. Yet on a recent conference call Lewis said “credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve.” Also on that conference call Lewis described a “deep recession that's going to be here for months.”
Unfortunately it may be here for YEARS thanks to our government prolonging the agony instead of letting nature run its course. It’s funny how much these kooks supposedly believe in “nature” when it comes to their desire of not interfering with the eco-system. If only they could make the correlation between their tampering with the laws of economic nature and realize it is very much analogous to the former.
Weidner wrote that “six months later, it's fair to say TARP has helped prop up some banks, but it hasn't flowed into the consumer credit markets the way the framers intended.”
That’s because those “framers” are blithering idiots at best, otherwise complete scoundrels. Just watch and listen to Chris Dodd and Barney Frank; enough said.
THANK GOD it hasn’t flowed through “the way the framers intended”. It stands to reason that credit would dramatically abate. It’s called going back to generally accepted underwriting procedures. The way these elected swindlers designed TARP was apparently not to fix the problem but rather to keep the Ponzi going until they are dead and gone.
While pondering the question of whether or not banks should open the proverbial spigot, just ask yourself this question: Would I personally make these loans from my own savings account? It’s a great question because under “Obamunism” - if the loans are bad – you are making them.
That’s the diabolical genius of Obama and little Timmy’s (picture Dr’ Evil’s “Mimi-me”) scheme to convert the Preferred Bank Shares to Common stock. It would appear that if they could take control of the management of these institutions by gaining control of the Boards and a large percentage of voting shares, they would essentially be able to engage in the type of reckless spending i.e. wealth re-distribution without having to bother with Congressional approval. It would be a minor technicality that they would be calling the redistribution “loans” instead of “spending”. This new spending could essentially be viewed by the recipients as “forgivable loans”. That’s chicanery at its finest! It would be a lousy deal for shareholders because any profits from the -good loans- made by the bank would be wiped out by all of the bad loans. If these preferred shares do get converted to common, don’t look for much in the way of dividends if you are a shareholder because any “profits” will end up in the hands of organizations favored by the administration that is controlling the Treasury Department. Looked at from this perspective, this would undoubtedly be the biggest bank heist in the history of the world. Instead of the tax-payers getting paid back with the present high yielding Preferred dividends, we will own equity positions in banks that will never pay dividends again as they become a piggy bank for governmental pet projects and corruption.
If you want to see the disingenuous motivation behind their proposal to convert the Preferreds to Common, let’s require that the conversion only take place if 100% of the Common is placed in -private- Social Security accounts for “Generation X” to be systematically divested over the next eight years with all voting rights diluted by the individual recipients of these accounts. (I chose Gen-X because they have paid into SS for decades, will continue to do so to fund the Boomers retirements – but will never receive anything close to what they’ve paid in.) That would take away the true motivation, which is control.
Subsequently, I’ve never heard of anyone converting Preferred stock to Common stock –without- the “convertible” feature being in the Indenture or Prospectus upon issuance. If these shares were indeed convertible, WHY was this considered NEWS as it was a few days ago when the trial balloon was floated?
In his conclusion Mr. Weidner wrote that “taxpayers fuming about the banks' unwillingness to loan government money into the system might reconsider, given that the banks are actually being prudent with taxpayer cash.”
That is absolutely correct; however, one cannot help but wonder what might have been if these prodigals had just returned the capital, all of these trillions of dollars, to its rightful owners, the people who created it. That would have been too radical, too “unfair”. So grab your popcorn, sit back and enjoy the deliberate destruction of western civilization. Don’t forget to thank your treasonous scoundrel in DC and your indoctrinated grandchildren for electing our Hussein.