TARP + Pay restrictions - working?

[blacbird]

Bank of America is going to pay back the stimulus money, in order to get out from under the executive pay restrictions:

http://www.msnbc.msn.com/id/34245560/ns/business-us_business

Which brings up the question, why the hell did they need that money in the first place? Oh, wait . . . at the time, they could only get it from the Feds; private lending was choked off. So . . . now private lending is available again, apparently.

But if they hadn't had those pay restrictions, they'd have been able to recruit a new CEO and they wouldn't have paid back the TARP money, is that what I'm reading here?

caw

[robeiae]

Yes.

They took the money because it was available. They didn't need to take it, just like Wells Fargo and some of the others.

Now, let's revisit that "financial collapse worse than anything, ever" meme...

[dclary]

The CEO of Bank of America a few months ago said they had no fiscal reason for taking TARP money, but did it because it was an easy, low-interest cash source for their buyout of Countrywide.

I bought stock that day. BofA has hovered at $40 a share for 20 years. It was at $4 that day. I got a ten-bagger working right there. (it's just a 400% increase as of today... but I'll take that.)

[whistlelock]

Now, who can we shoot?

I ask because I feel someone from the banking industry needs to be shot.

[Magdalen]

Now, who can we shoot?

I ask because I feel someone from the banking industry needs to be shot.

Get with the program, dude. We waterboard now, doncha know?

ETA: Oh, that's right, Bush & Cheney aren't running things anymore. I keep forgetting.

[blacbird]

I'm just trying to be a little analytical here.

1. They took the TARP money, out of desperation, because they were on the precipice of tanking and couldn't get funds privately, owing to the credit glaciation.

2. At first, it was okay. Then Obama became President, and shortly after, instituted limits on exec compensation.

3. The BofA CEO retired, and they are trying to attract another one. They pay limits have stifled that effort.

4. Oh, but wait! It's a year later now, and at least to some extent, the bank-to-bank credit crunch has dissipated, and BofA can now obtain the money to pay back the TARP (and almost certainly more than that) privately. So, they can now offer tens of millions of dollars in salary and maybe five or six times that in "bonuses" to a new CEO, once they clear their government books.

5. Consumers, of course, still can't obtain loans easily, mortgage or otherwise.

6. Does anybody else here smell "extortion", in the "fiscal crisis" of 2008?

In any case, I'm glad the emmeffers are repaying the money, and hope some of the other lampreys will be induced to do likewise. If all it takes is clamping down on exec compensation, that's a pretty good deal, seems to me.

caw

[robeiae]

I'm just trying to be a little analytical here.

1. They took the TARP money, out of desperation, because they were on the precipice of tanking and couldn't get funds privately, owing to the credit glaciation.
No. This is where you're messing up. They (some, not all) took the money because it was offered.

[dclary]

No. This is where you're messing up. They (some, not all) took the money because it was offered.

Exactly. They're bankers. They buy money low, and sell it high. And the government was just giving it away.