Obama’s Coming Bank Grab?

Ben Johnson, FloydReports.com

If you have enjoyed owning a car company, you’re going to love getting voting representation in several banks nationwide. Barack Obama’s Treasury Department is already “monitoring” 19 banks and may appoint new board members. The trouble? They took TARP money and have fallen behind on their payments. Almost as troubling, the mainstream press is presenting things as though they had never been better. Zachary A. Goldfarb at The Washington Post writes:

The Obama administration has begun monitoring the high-level board meetings of nearly 20 banks that received emergency taxpayer assistance but repeatedly failed to pay the required dividends, according to Treasury Department officials and documents. And it may soon install new directors on some of their boards.

The moves come as the number of banks that failed to make at least one dividend payment to the government rose to 132 in the last quarter. These “deadbeats,” as they are sometimes called, are virtually all community lenders and collectively received billions of dollars in taxpayer assistance.

In addition to those firms, seven others have failed, resulting in the total loss of the government’s investment.

The number of banks that have missed six or more dividend payments has reached 19, up from seven during the previous quarter. Under the government’s agreement with those firms, the Treasury now has the right to monitor their boards and appoint new members.

So much for the Barack Obama who said last April, “I don’t want to run auto companies, and I don’t want to run banks.” (To properly understand Obama, you must replace “don’t” with “desperately.”) He may insist he does not want to engage in this behavior — and he repeats it again, and again, and again.

The story goes on to reveal “a fifth of banks in the program, almost all of them small community lenders, are not paying the government dividends on time,” meaning they too are en route to an Obama-appointed bank board. The Wall Street Journal reported Sunday that as many as 98 bailed-out banks, which received $4.2 billion in TARP funds, are in danger of failing based on an analysis of their third quarter earnings results.

Will the new appointees….

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Obama Reform Plan Will Have Taxpayers Paying for Bank Failures

Money News

A Senate measure advertised as protecting taxpayers from another Wall Street bailout would still leave them fronting the money if the government moves to liquidate a big failing company like insurance giant AIG.

Taxpayers could end up putting up billions of dollars to cover the costs of dealing with such a firm and be able to recoup that money only over a period of five years, under the Senate’s sweeping overhaul of financial regulations.

An amendment the Senate is expected to pass Tuesday states that "taxpayers shall bear no losses from the exercise of any authority under this title."

Sen. Richard Durbin, D-Ill., says the legislation means: "We’re never going to let the taxpayers and Treasury face this kind of obligation."

But the measure doesn’t prevent that kind of obligation, though it does require that taxpayers would be paid back.

"The bill ensures taxpayers don’t get stuck paying for Wall Street’s mistakes," said Kirstin Brost, a Democratic spokeswoman for the Senate Banking Committee. The government would have top priority getting repaid, with proceeds of the sale of a liquidated firms’ assets going to the government first.

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Barack Obama’s Economic Illiteracy

Barack Obama is demonstrating just how little he understands basic economics. He believes growing the government at a rapid rate is what causes prosperity, declaring America must “spend our way out of this recession.” He also in recent weeks scolded “fat cat bankers,” telling them they need to loan more money out in order to get our economy going again. Obama’s economic illiteracy is plunging our country into economic ruin.


From bailouts, to company takeovers, healthcare reform and stimulus bills: if it involves greater taxpayer involvement Obama supports it.

When Obama reported that the Treasury had received back $200 billion in TARP funds, he declared that he planned to spend that money on a second stimulus while paying down the debt. This is patently untrue. America will not be paying down any debt. The Senate is moving to raise the debt ceiling by over $1.8 Trillion. Actually, we will be borrowing a record sum, as Obama mortgages our future to “spend us out of this recession.”

The problem with his policy is that it doesn’t work. Government spending has never created prosperity. Every dollar the government spends must be taken from someone else. Government engages in wealth transfer not wealth creation. Borrowing money and running sizable deficits is transferring wealth from the future generation, which faces paying off Obama’s credit card. The bill must be paid someday. Obama is robbing future generations in order to support his binge spending.

Obama’s first Stimulus was nothing more than a slush fund of money, used by Democrats to support their liberal pet projects. $6 Million worth of stimulus money lined the pockets of Democratic pollster Mark Penn who used it to create three jobs. $18 Million from the stimulus went to fund Obama’s recovery website, which reported on jobs saved and stimulus money spent in Congressional districts that do not exist. With that kind of success rate it should surprise no one that Obama’s approval rating has plummeted to 45%. American voters understand government spending is not the recipe for recovery.

Recently, Obama met with leading bankers, individuals he referred to as “fat cats.” In his meeting Obama pushed these banks to lend more and loosen up their capital requirements on loans. Nobody is arguing that these banks need or deserve the outrageous bonuses they have been pocketing after Obama bailed them out with the taxpayers’ dime, but the idea that they need to lend more is nearly ludicrous.

The reason the housing market collapsed in the first place was because Congress pushed Fannie Mae, and Freddie Mac to loan nearly half of their assets to families with incomes below the national median. Coupled with the Community Reinvestment Act, which forced banks to make imprudent loans, overzealous lending created an artificial housing bubble that collapsed. After the CRA was expanded in 1995, bank loans going to low- and moderate-income families increased by 80%. These were the same banks that were later attacked for being predatory for taking undue risks. They were making poor loans, but it was at the behest of a federal government that was trying to artificially increase home ownership amongst people not equipped for the responsibilities of home ownership.

Fast forward back to today, Obama is now encouraging banks to make more loans, asking banks to take more risk. This is the same Obama who has criticized banks for making risky loans in the past. By creating business climate uncertainty Obama is not helping our country to stabilize. Obama’s conflicting messages are confusing. Which “Obama” are banks suppose to listen to; the one who demonizes risky behavior, or the one who demonizes banks for sitting on their assets?

Obama’s meeting with bank leaders was simply political theatre as was his recent “jobs” summit. Jobs aren’t created by bureaucrats sitting around talking. They are created when people are free to innovate and create without undue fear of erratic government behavior. If the government would cut back on its’ wild spending, cut taxes and promote a stable regulatory environment, the private sector would start creating new jobs.


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