Will Treasury double down with your TARP money?
Timmah plays Russian Roulette
Captain Indispensable announced today that10 banks that will repay their TARP money, totaling $68.3 billion. (As Hot Air notes, they’re keeping the warrants on the banks’ stock). But what happens to the money once it’s repaid? Captain Indispensable’s statement addresses this:
“proceeds from repayment will be applied to Treasury’s general account. These repayments help to reduce Treasury’s borrowing and national debt. The repayments also increase Treasury’s cushion to respond to any future financial instability that might otherwise jeopardize economic recovery.”
To put it another way, Timmah just got a $68.3 billion slush fund.
I find it a little more than a coincidence that last month, as the Wall Street Journal reported, the remaining major banks, including Citigroup and Bank of America needed at least $65 billion. It takes very little imagination to wonder where this is going.
The TARP money was part of a $700 billion emergency fund, a debt that still needs to be paid by taxpayers. I don’t know if the original legislation allowed Treasury to recycle the money, but I know it doesn’t matter. Instead of allowing the healthy banks to cancel the debt, it’s a safe bet that Captain Indispensable will be doubling down on the zombanks of Citigroup and Bank of America.