Thursday, June 04, 2009
Jamie Dimon's fighting words
This week, though, he has taken another swing at government intervention, first by reading out a fictitious letter to Treasury Secretary Tim Geithner at a conference: "Dear Timmy, we are happy to be able to pay back the $25 billion you lent us. We hope you enjoyed the experience as much as we did".
That's no more than a bit of ribald humor, perhaps. But he later followed it up by saying the U.S. should cancel half the warrants tied to Tarp investments in banks "out of fairness." That may resonate with some -- why should a bank that didn't need Tarp cash and that should be one of the first to pay it back be forced to make good on one of the attached strings that will dilute its shareholders?
But it's not as clear cut as bashing barmy changes to Tarp and PPIP. The warrants were part of the original Tarp package back in October -- and, all else aside, JPMorgan has enjoyed almost nine months of cheap money from the taxpayer.Perhaps it's just another bold Dimon gamble -- and if the U.S. caves and cancels a portion, he'll be hailed as a hero. But sometimes staying silent on some issues can be the greater virtue.
I couldn't disagree more with the conclusion to this article. The gov't is trying to force the banks to accept terms which will give the gov't ownership over those banks for absolutely no reason. Many banks took TARP money because they were pressured to do so by the Fed and Treasury even though they did not require the capital. Hmmm, why would the gov't want to force banks to keep taxpayer money? Could it have to do with wanting to have a say in how these banks are run? That is the only thing that makes sense. Bankers need to loudly complain about the Obama administrations not so stealthy attempts to force themselves on the banking system. Well capitalized banks should be celebrated.
I just saw this over at Hot Air and I swear I did not know they were going to post this. Ed Morrissey makes the point that TARP and the strong arm tactics began with the Bush administration. I would be remiss if I didn't add that this was a horrible precedent and further evidence that George W Bush's conservative convictions were only an inch deep.
Some of these wanted to opt out of the TARP program earlier this year, notably Wells Fargo, Goldman Sachs, and JP Morgan. The Obama administration has thus far rebuffed those efforts, claiming that they’re not healthy enough to pay back the money. If they weren’t sick enough to need it in the first place, why can’t they pay it back now? Simple: the Obama administration likes this tool, and doesn’t want to surrender its leverage until they’re finished overhauling the American economic system to their liking.
I would love to know what Bush, Paulson et al. think about the Obama administration's use of their creation. Unfortunately, I am not sure that they would disapprove.