It appears stress tests may force banks to convert TARP stock and not everyone is happy. Here’s why – The government will get whatever it wants here. It apparently designed these so-called stress tests in such a manner that they were unique to each bank. Thus, by raising or lowering the bar before each test was administered, the Treasury could pre-determine the outcome of these tests. Thus, if the Treasury Department wants more control, if it wants to insist that a bank sell it more shares of stock, it will create a test that brings about the poor result it wants. There is simply no authority under U.S. law, and under the Constitution, for the government to do this. The concept of private ownership and government control should be called by Americans by its proper name: Fascism. And then there’s John Thain who’s firing back at his former employer, Bank of America. Here’s what I think – The former president of Merrill Lynch is not happy that he was fired from B of A, even though he left a very wealthy man. He does not refute Ken Lewis’ statements revealed last week, that B of A was forced to acquire Merrill Lynch for $17 billion less than it was worth. He only argues that Lewis and the B of A folks knew what it was worth when they bought it. He may have inadvertently open a new can of worms for himself: Did he knowingly sell an asset to a public company, which had received a huge federal investment, for $17 billion less than he knew it was worth? If so, has a problem with fraud.
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