House Votes Against TARP Bail Out - while vote is meaningless, message is not

The House of Representatives today voted against releasing the second part of the $700 billion TARP funds to the Obama administration.

The House by 270-155 passed the resolution, but the measure has virtually no chance of becoming law. The Senate last week rejected a similar resolution, thus allowing the Obama administration to tap the remaining $350 billion in the Troubled Asset Relief Program (TARP) created last fall.

The House also put conditions on the TARP:

TARP Bank Recipients Have Offshore Tax Havens

The GAO released a new report, International Taxation: Large U.S. Corporations and Federal Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions recently (see bottom right hand corner).

International Taxation: Large U.S. Corporations and Federal Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions, December 18, 2008

The Washington Post went further to see which of the TARP recipients also have offshore tax havens:

American International Group, Bank of America, Citigroup and Morgan Stanley are among the companies that are getting bailed out by U.S. taxpayers while having subsidiaries in locations where they can avoid paying U.S. taxes

Stimulus Plan Repeals Financial Sector Huge Tax Breaks

Well, this went sliding by. Obama's stimulus plan repeals tax breaks given to banks for mergers and acquisitions earlier this year. The repeal only affects future mergers and acquisitions.

To address the financial industry meltdown, the Treasury Department last fall issued a new tax rule to make it more attractive for healthy banks to buy troubled ones hit hard by the mortgage crisis. It allowed healthy banks to avoid billions of dollars in taxes by offsetting their profits with the losses of the banks they acquire.

Before, the merged bank could write off only a limited amount of the losses. Removing much of the restrictions enabled the acquiring banks to make huge reductions in their tax liabilities.

BoA Gets $20 Billion Because They Bought a Turkey

Make a bad acquisition? No problem. The treasury department is now giving BoA $20 Billion to absorb losses from it's acquisition of Merill Lynch. BoA has already received $25 billion. Oh yes, they get loan guarantees too.

The loan guarantees will cover about $118 billion in loans and other holdings such as securities backed by residential and commercial real estate loans. The bulk of these holdings were obtained by Bank of America in its acquisition of Merrill Lynch, a deal which closed earlier this yea

If anyone recalls, no one was twisting BoA's arm to acquire Merrill Lynch.

BoA promptly fired 35,000 workers upon the acquisition.

Senate Gives Away the Rest of the TARP $350 Billion

Senate gives away more money

There is no anything to give the money directly to homeowners. We have only Larry Summers claiming to ease foreclosures.

That means nothing. They can claim almost anything would help homeowners when in fact the money goes directly to banks where as it is we have no accountability.

more details

Republican Sen. Vitter:

There's been mistake after mistake, embarrassment after embarrassment, and a complete lack of accountability in the TARP program," said Vitter. "The American people are not going to be fooled twice ... I urge all of my colleagues not to be fooled again, to say no to an open checkbook.

More Cash for the Banks..... or the Economy Crashes?

The banks are saying that they need more cash or the economy gets it.

Banks have received $200 billion in fresh capital from the Treasury since last fall and have borrowed hundreds of billions of dollars more from the Fed. But in the meantime, the economy fell into a severe downturn last fall that is likely to continue until at least this summer.

Industry analysts estimate rising unemployment and business failures will lead to another $500 billion to $750 billion of losses in coming months. That could bring total losses from the credit crisis to $1.5 trillion to $1.8 trillion, twice as high as earlier estimates.....

“More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets,” Mr. Bernanke said in a speech to the London School of Economics.

Obama wants the other $350 Billion of the TARP

My, my. Now Congress is going to approve handing over yet another $350 Billion dollars, the second half of the original $700 Billion, to have it ready for when Obama is sworn into office.

There are promises of better accounting.

A vote is expected this week.

Is this insane when so many said there are much better and more importantly cheaper ways to assist financial institutions, many written about on this site?

Senate Banking Committee Chairman Christopher Dodd, D-Conn., said Sunday that lawmakers were assured there would be fuller accounting of the money spent on the bailout. Banks and other financial institutions have received billions from the government with few rules, and most won't say where the money has gone.

What's in a Name? Fed Approves GMAC to become "bank"

It's all the rage to turn your corporate entity into a bank in order to get access to the TARP financial bail out money.

Fed Approves GMAC Request to Become a Bank:

In a 4 to 1 vote, the Federal Reserve Board approved GMAC’s application to transform itself into a bank holding company “in light of the unusual and exigent circumstances” affecting the financial markets. The move will allow GMAC to tap as much as $6 billion in government bailout money. The approval came as GMAC bondholders were facing a Friday deadline to vote to approve a complex transaction that would significantly reduce the company’s outstanding debt.

American Express Nabs $3.39 Billion in Government Bail Out Money

Now who here thinks credit cards are just too big to fail or that the U.S. taxpayer should be supplementing companies who charge rates and fees which are akin to loan sharking?

Yet, without even a whimper, American Express just hauled in $3.39 Billion of taxpayer dollars in exchange for preferred shares.

American Express joins more than 190 regional banks, commercial lenders, insurers and card issuers seeking at least $75 billion from the second phase of the Treasury’s bailout program for financial firms. Rival Capital One Financial Corp. has preliminary approval for $3.6 billion from the U.S. and Discover Financial Services asked for $1.2 billion.

Note who is in there, one of the worse credit card companies of all time, Capital One and they are approved for $3.6 billion!