Do I have this right? Instead of lending with that taxpayer money to get the economy going, Citibank and Bank of America are using TARP funds as their “at risk” portion of the “public/private partnership” announced Monday to buy up each other’s toxic assets. So it’s Wednesday and the program is already corrupted.
The idea is that a portion of any loss investors take will be covered by the government, but because they put their own money into the deal there is still risk. EXCEPT these banks (and how many others?) are using TARP money as the “at risk” portion of the investment.
Crooks. Smart crooks, but still crooks. Enabled, of course, by a governing ideology that just can’t bring itself to stop them.
Economist’s View: "Has the Gaming of the Public-Private Partnership Begun?",
It certainly looks as if Citigroup and Bank of America are using TARP funds, not to lend, which was one of the primary goals of the program, but to scoop up secondary market dreck assets to game the public private investment partnership.
So not only are they seeking to extract far more than was intended even with the already generous subsidies embodied in this program, but this activity is also speculating with taxpayer money.
This sort of thing was predicted here and elsewhere. Welcome to yet more looting.
Why would a bank that is receiving TARP funds because they hold toxic assets be buying any toxic assets anyway?
Nationalize the insolvent banks, please. And fire Geithner for this, if it turns out to be true. At first I thought it was a creative idea, but maybe it’s just more ideological blindness.
Update – Ian Welsh has more