Not a single bank has opted for government money to raise “Stress Test” mandated funds.
No Rose Garden ceremony.
Obama embarrassed again.
For months we’ve been told that financial Armageddon was nigh. The only salvation, other than Obama’s halo, was to allow Obama to take over the banks and allow them to be run according to his infinite wisdom and that of his cronies. To that end, and to avoid as an alternative to overt nationalization, the White House cooked up a scheme to bestow tens of billions of dollars upon the banks, no matter if they wanted or needed it! Evidently, most of them did not! The Obama administration was so deathly afraid of “letting a crisis go to waste” that they never even had a plan to allow the banks to pay back the funds that they received. After all, it wasn’t Obama’s money. It was yours! As the banks received the funds, the administration started tightening the screws, dictating who banks were allowed to hire and who to fire, how much to pay whom, and very soon there would be forthcoming guidelines as to how to lend money and to whom.
Banks became leery of TARP
Of course, the banks wanted nothing to do with this and not only said so, but, putting their money where their mouths are, they wanted to return the TARP funds. All hell broke loose! What?! Give back government money? What kind of reactionary plot is this? This concept caused Obamunists’ synapses to misfire and they were seen bumping into White House corridor walls muttering “does not compute. does not compute.” Obama himself was seen screaming, as he sprayed bystanders with half swallowed Bellini peach puree, “Danger, Will Robinson! Danger!”
The administration was all starry-eyed, hoping that the nation’s major banks would end up like Chrysler. However, without unions, why, the government would just keep control of them…on behalf of the people. Yes the same people, you and me, that Obama sold down the river to the UAW in the Chrysler deal, but that’s another story. Seeing that dream slip away the Obamunists concocted up yet another plan.
First, the administration actually prevented banks form returning the TARP funds, decreeing instead that the banks would need more funds. To that end, they further ordered that banks would have to convert the preferred stock, that Obama held, into common stock which Obama would still hold and thus gain direct voting control of the biggest banks. This way the shareholder vote would replace the threats and media defamation with which the Obamunists tried to manipulate and control the banks while they were mere preferred stock holders.
The country rose up against Obama
The banks rose up against this and so did the public! Tea parties from sea to shiny sea told Obama that the country would not tolerate his brand of Socialism and Nationalization. CEO’s of banks and other financial institutions came out and told the world of the Nazi like tactics that the Obamunists were using, including threats against the banks and the individuals and their families – there are even reports of death threats, though the sources have not been established. Banks screamed that they wanted to return the funds and get done with the would be dictator in the White House, Rahm Emanuel, and they weren’t all that enamored of Obama either. The White house was once again set back on their heels and in a last ditch attempt to justify nationalization of banks they came up with the “stress test” scam. The tests themselves were ridiculously rigged in the hope to catch the banks and force them to accept TARP funds and thus government control.
Loan loss provisions were actually tested on the assumption that all loans losses would take place at the same time meaning, therefore, that all the debtors would default at the same time!
Oh sure that’s a realistic scenario! It shows once again how desperate Obama is to get his grubby hands on the banks. Someone stated that if the European Union applied the same tests to the Euro banks, the amount of money they would need to raise to pass the tests would be many times higher than that needed by US banks. Keep in mind that they have only a handful of banks compared to the more than8,000 we have! Obama tried to sell us a damn bill of goods!
They were oping to use this to justify pumping more of our money into the banks so that they could then own a majority stake. But they made a major tactical mistake – they were too slow in implementing the tests!
Then the unthinkable happened! Banks posted record first quarter earnings.
How could the administration justify painting bank gloom and doom headlines on the front page of every newspaper and every drive by media news network when the banks were coming out with multi-billion dollar record profits. It was the beginning of the end of this version of Obama’s attempt to take over the nation’s major banks.
Just about all banks that received TARP funds stated that they wanted to return it. Hedge fund managers, disgusted with the way that Chrysler’s secured debt holders were treated began to publicly voice their concerns and Obama’s economic polls started to tank. The White House now had no choice. They had to play out their ridiculous “Stress Test” card and hope to spin it in a favorable manner.
Stress Test Surprise
The results of the Stress Tests came out and the administration had to grudgingly report that the health of the banks is a lot better than expected. In fact, none of the banks – not a single one – was found wanting in tier one capital! The administration subjected the banks to a doomsday scenario and even then the results came out a lot better than expected with all but Bank of America being required to raise a lot less money than expected. Not a single bank is opting for government funds to meet the Stress Test funding needs. In fact, J.P. Morgan is doing a deal this morning, not just for equity, but also for debt, in which they are raising a lot more than the TARP requirements. Like Morgan, Wells Fargo is also doing a deal to raise the Stress Test required funds and like Morgan’s deal it too is oversubscribed and indicated higher than syndicate price. Even Bank of America came out and said that they will repay the TARP funds very soon!
This is yet another major embarrassment for the Obama administration! You want proof? Did you see the big Rose Garden press conference to celebrate the fact that the banks are a lot healthier than initially propagandized? Exactly! This guy travels all the way to Ohio to take credit for hiring five cops. If this wasn’t yet another major gaffe, I think he would throw a parade down Pennsylvania Avenue to celebrate “saving the banks.” He got caught trying to rob the banks and he is hiding! Once again America wins and Obama is handed yet another singing defeat for all the world to see!
Don’t feel bad for the guy. He’ll come up with something and now that he is desperate he’ll be even more dangerous!