Banks Repay Tarp Money To Avoid Government Control; Guess We’re Not Socialist After All
Attracting cries of “socialism” from wary conservatives, banks received TARP money to preserve the banking system. Now, many of them are paying the money back. Citigroup is putting $20 billion back into the treasury. Bank of America paid back $45 billion December 9, two years ahead of schedule. JP Morgan Chase paid back $25 billion, Goldman Sachs $10 billion and Morgan Stanley $10 billion on June 9.
Of the 737 institutions that received bailout funds, 51 other banks have wiped out their financial obligation to the Feds according to ProPublica’s database on the subject.
Obligations the government demanded are the motivator behind the payback of these dollars. Companies don’t want to be told how much to pay their executive, and the government (and taxpayers) want the money back.
For one, paying back Uncle Sam ends government strictures on executive pay. Bankers say these restrictions make it impossible for bailout-receiving banks to compete for top banking talent. AIG head Robert Benmosche was reportedly on the verge of jumping ship only a few months after being hired because of pay frustration.
Plus, there are plenty of what hedge fund whiz George Soros calls “hidden,” or indirect, benefits for bankers in the government’s attempts to reinvigorate the economy. From miniscule interest rates to a number of moves to get credit flowing freely once again, banks are getting plenty of federal help without the public relations blemish of counting government dollars on their balance sheet.
And with the public spotlight on banks, they are carefully watching their actions.
How sensitive banks are to public criticism right now is best shown through the actions of Goldman Sachs, which recently announced that its top 30 bankers will have their entire bonuses converted into company shares for 2009. That follows on the heels of a widely panned move to donate $500 million to a variety of programs to help small businesses.
So, are we still going to hear how much the president is a socialist?Click here for reuse options!
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