Clarification of how banks use the TARP funds.

[Mike 03]

They are using the funds in all sorts of ways, not simply "lending it back to us plus an interest rate."

With a little effort, one can find out what the funds are doing and how they work and why this is important.

I hate wasting a post making this point, but it just seems like there is so much misinformation here lately about the entire stimulus/bank bailout plan, it upsets me. I'm tired of trying to make this point. But if you care to find out, you can.

The information is out there.

[soothsayer]

1. True. They're also giving it out to themselves as bonuses.

[amandabeech]

2. Your post would be more convincing if you posted some cites to information

on just where our money is going.

I have not been able to find anything on the Treasury's site at all. The Treasury is the agency that should know since they're giving the money out, but everything they have is very, very vague.

There's a lot of speculation out there, but if you have cold, hard facts, please share them!

[Igel]

3. Of course.

Chase-Morgan was clear at the beginning that they didn't need the money, they'd use it for acquiring other backs and enterprises if the opportunities arose.

A number of the 'banks' that got the money were holding companies--funding them allowed the banks to meet the capitalization requirements that marked-to-market securities no longer covered. It kept them from going belly up, which, to my mind, isn't a bad thing.

Now, one part of the subprime problem was lending to people who were poor credit risks. "Banks," we said, "stop making risky loans. Tighten credit." The result was that banks tightened up credit requirements. Suddenly they're not loaning as much as they did before, so the response is, "loosen up your credit requirements."

I was talking to a mortgage broker today. General impression: lenders are being cautious with lending, they want to make sure that they don't lend to people with poor credit, to bad risks, and at the same time that they cover their tails when it comes to documenting that somebody is a good risk (or a bad one). Sometimes in silly ways.

[amandabeech]

4. Still waiting for some help on finding credible information. n/t

[Oregone]

5. They can also use them to buy eachother's toxic assets

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3813667

Right after they over price them (that allowance came forth yesterday). So government TARP funds will be the 15%, the government will finance the rest, and the taxpayers will get fucked in the end.