Breaking Silence

by Crocker on February 18, 2009, 9:22 pm

in Economics,Politics

Is this what it’s come to? That the government would order bankers to take money while simultaneously telling them to lie about it?

As I described in ‘Bring on the Show Trials’, I was sickened by the spectacle of bankers forced to grovel before the likes of Barney Frank and Maxine Waters – without apparent protest. The pretext for the show trial was, of course, their supposed failure to lend their TARP money, which was forced on them by Paulson and Bernanke.

But today we had a breath of fresh air – a banker who told the truth about the government’s mismanagement of the entire program and, not incidentally, finally cracked the omerta surrounding the matter. From TwinCities.com:

There is no “A, R or P” in the government’s Troubled Asset Relief Program, quipped U.S. Bancorp Chief Executive Richard Davis Tuesday morning in front of about 300 business people in Minneapolis.

“It’s just troubled,” the 50-year-old CEO said at the Thrivent Financial for Lutherans’ Business Leaders Forum. . . .

But Davis was critical of the U.S. Treasury’s Troubled Asset Relief Program introduced last fall, saying that while the program was well intended, it has turned out to be “lousy.”

Created to encourage lending to small businesses and consumers, TARP started by shoveling tens of billions of dollars at the country’s biggest banks but soon was expanded to include banks of all sizes. Minneapolis-based U.S. Bancorp got $6.6 billion.

“I will say this very bluntly: We were told to take it. Not asked, told. ‘You will take it,’ ” Davis said. “It doesn’t matter if you were there on the first night and you were told to sign on the dotted line before you walked out of the office, or whether in the days that followed, you were told to take it.”

Notice the first part of the problem: the banks were made a offer they couldn’t refuse – regardless of their solvency.

Then, there was the government’s misdirection concerning use of the funds.

Davis went on to say in his talk that while government officials marketed the program as a way to entice banks to lend again, TARP actually was designed to give solid banks like U.S. Bancorp some extra cash to buy weaker banks in the system. U.S. Bancorp did just that late last year when it acquired the assets of two failed banks in California, Downey Savings and Loan and PFF Bank & Trust.

“We were told to take it so that we could help Darwin synthesize the weaker banks and acquire those and put them under different leadership,” he said. “We are not even allowed to mention that. … We were supposed to say the TARP money was used for lending.”

But Davis is talking about it now, he says, because he and others oppose current and future strings attached to the program. Davis didn’t detail those strings, but he said he and some peers intend to voice their opinions to Washington, D.C., soon.

“Now they’re punishing you for having the capital,” he said, adding that he refuses to stand by and let his company become “collateral damage” in an attempt to nationalize the banks.

So, we find out that the TARP was meant to assist market Darwinism, not to make more bad loans. And that our duplicitous government pulled a bait and switch. Think about it: forced to take the money and then told to lie about it.

‘Collateral damage’, indeed. All this and Barney Frank, too.

Be Sociable, Share!

Previous post:

Next post: