Big Banks Want to Repay TARP!
Under their contracts with the Treasury, Goldman, JP Morgan Chase, and Morgan Stanley, can ask Treasury to let them buy back their stock and Treasury can say Yes or No. It can also impose conditions on the buy back of the stock. When I say “can” I mean it believes it has the power to do so, I do not mean that the Constitution permits the government to make up rules during its involvement with the banks. It does not. The essence of due process, which is required of the government by the Constitution, is not only fairness, but knowledge ahead of time of what is expected and what the government’s powers are. Here, Treasury is making up rules (Whose money will we take back and whose money will we decline? What can we get from the banks in return for leaving them alone?) as it proceeds through the process. An unintended consequence of all this is now the creation of second class banks: Those that are unable to repay TARP as quickly as others. Here’s a question for that old extorter Hank Paulson: If TARP can be repaid in eight months, what good did it serve?
