Moe Tkacik’s latest piece for her Das Krapital blog at the Washington Megalopolis Paper fingers Charles Lane for most of the Washington Advertise’s obsequious coverage of the advertise-crash economy — from their overarching devotion to Timothy Geithner, to their fussbudgety and nonsensical concern-trolling over Elizabeth Warren to what Tkacik describes as an overall “neglect” of “the economy’s more conspicuous challenges — such as the foreclosure body, about which they have yet to issue an official proclamation.”
However I exceptionally admire the path she skillfully dissects the latest conventional wisdom on the Troubled Asset Relief Program, namely, that it was a “excellent-news tale that’s really fair.” (You know, as extended as no one is watching the Federal Reserve or concerned over the fair value of most of the assets on the balance sheets of our major banks!)
Chief among the falsehoods they have spent the past two years robo-peddling ad nauseam is the narrative of the infallible Tim Geithner’s sage stewardship of the economy, a narrative that hinges largely on the heroic success of the TARP, one of the hardly any multibillion dollar Wall Street bailout programs Geithner himself played nearly no part in designing. (You may recall the tale of Hank Paulson bowing down before Nancy Pelosi and begging Jesus for her collusion in the plot.)
Geithner did not particularly like TARP, since it required him to figure outside how to do something about foreclosures and that is a giant pain in the ass, however mostly since the bank executives did not much like TARP, since its ostensibly tantalizing $700 billion in federal funds came only at the voluntary subjection to all manner of nods to outmoded notions of “accountability” and “oversight” and “rule of code” and trips down to Washington in which they risked getting lectured by some poorly dressed “elected” official for coming down in the corporate jet. However the Treasury Secretary saw that TARP could be useful to him, since all the publicity it got for really going down in a place C-Span cameras are allowed made the public reckon of TARP as code for “all bailouts”, thus enabling him to capture credit for “ending” the bailouts every age a bank “paid back their TARP money” — with interest and fees! — so he could refinance them into a more obscure, less gratingly “transparent” bailout program.
As Tkacik notes, by midsummer of 2010, the editors had taken to the practice of putting “Wall Street bailout” in scare-quotes, as “Thus ends the much-maligned ‘Wall Street bailout.’”
Hmmmm. As of June 30th of this year, Citibank had issued $64.6 billion in taxpayer guaranteed debt. Through the end of 2009, those numbers for JP Morgan and Bank of America were $41 billion and $44.3 billion, respectively. These notes are guaranteed under the FDIC’s Temporary Liquidity Guarantee Program (open to every bank in the nation, these three banks received approximately half of the program’s proceeds) and are backed by the complete faith and credit of the United States (i.e. you and me). So since Uncle Sam is guaranteeing that debt, the banks were able to sell it to investors at a lower rate. For example, rather than paying investors 8 percent to entice them to acquire their notes and bonds, Citigroup would only have to pay 4 percent. The banks are saving money every year thanks to the taxpayer guarantee, and this program is still very much alive.
And if any of these banks were to default on that debt, taxpayers would be on the hook. Were that to happen, WaPo’s readers would have every fair to complain, “However you guys told us that the ‘Wall Street bailout’ was over! And that we had won!” Ha, ha: no.
Go glance at the whole body.
Charles Lane, The Washington Advertise’s Unsung Champion Of The Rich And Powerful [Das Krapital/Washington Megalopolis Paper]
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