US taxpayers money = Treasure to loot

[ar81]

Taxpayers hit as TARP takes a new turn

But more than 600 smaller banks are still left in the program, and owe roughly $130 billion to taxpayers.

In the latest stage of TARP negotiations, many banks will struggle to repay that money. The government will be forced to negotiate separate deals with banks that could result in losses for taxpayers.

Ethics angle missing in financial crisis debate

The debate about fixing the financial crisis seems to be missing a key factor -- a broad ethical discussion of what is the right and wrong thing to do in a modern economy.

I do not want to judge US, about what is acceptable or not in US culture.
But to me it looks like Bush's bailout is an treasure in the open to loot.
I used to believe that if a bank enters bankruptcy it is not over as it could restructure and go on, so why should money be given away like that? Wasn't it that bailout was a loan of existing money paid by taxpayers, and not money created by thin air like banks do? How is it that it results with losses instead of interests? Are banks allowed to default on taxpayer's money? Does it mean that taxpayers can default and not pay their taxes too?

Is it right for Americans to rescue banks that way?

[Loki]

The irony is that if the government didn't bail the banks out and they went bankrupt, you'd be whining about the government allowing a lot of people to lose their jobs.

[ar81]

Did TARP restart lending? If not, the bailout was useless.

Bankruptcy means that a company restructures its debt and goes on, not the end of the company.
It is achieved under Chapter 11.

Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter 13 provides a reorganization process for the majority of private individuals.

Bankruptcy affords the debtor in possession a number of mechanisms to restructure its business. A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business' earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue.

Without TARP they should have used Chapter 11.

[wiggin]

Of course, that would have caused wholesale collapse of the US financial system, but let's not think about that.

The fact of the matter is that TARP is actually doing far better than people projected - largely due to improvements in the stock price of the big banks and the resultant sale of warrants. It might even break even, though that is still to be seen. To criticize it now, that things are much better off, is pretty silly. TARP was largely necessary and pretty effective as far as these things go.

[agamemnus]

Of course, that would have caused wholesale collapse of the US financial system, but let's not think about that.

The fact of the matter is that TARP is actually doing far better than people projected - largely due to improvements in the stock price of the big banks and the resultant sale of warrants. It might even break even, though that is still to be seen. To criticize it now, that things are much better off, is pretty silly. TARP was largely necessary and pretty effective as far as these things go.

Sigh. Rewrite history much?

[ar81]

TARP bailed out Warren Buffet...
He had $26 billion invested in 8 financial companies that were bailed out.

Reuters: Buffett’s Betrayal

[agamemnus]

That's 7 billion, AR. A bit more than a tenth of his fortune. 12% or so investment in banks out of a very diversified portfolio is normal. Well, it's not per se a 12% investment in banks, but it must be somewhere around there.