Senate Okays Release Of Second Half Of TARP Funds

So how is that bailout working for you?  Despite the infusion of $350 billion into the banking system with the release of the first half of the TARP fund bailout, banks are still failing.  The banks did not unfreeze their credit markets with the funds, but spent the money acquiring each other despite taxpayers being lead to believe that there would be a different outcome.  And now two of the big names in banking are back at the trough again and in real trouble now.  The Senate okayed the release of the second half of the TARP funds despite this news yesterday.

The federal government also agreed to invest an additional $20 billion in Bank of America Corp. and to share losses on $118 billion of the company’s assets.  Bank of America had acquired Merrill Lynch during the bailout, but lost $1.79 billion and cut its dividend to 1 cent a share as of yesterday.  Obviously they used their bailout funds wisely.  The other bank running back to the trough is Citigroup.  Citigroup took $45 billion in US rescue funds.  They now will have to relinquish control of Morgan Stanley and are cutting any non-core businesses, specifically consumer lending offshoots.  Yesterday shares of Citigroup and Bank of America lost more than one-quarter of their value.  An analyst by the name of John McDonald had this comment after hearing of the cuts that Citigroup is making, “It will likely be difficult for Citi to effectively dispose of assets and businesses in the current environment.  Any new solution is likely to need an incremental infusion of common equity, either from the government, private investors or the public markets, any of which is likely to be dilutive to existing Citi shareholders.”   So giving the bank more taxpayer money really will not work, but we’ve already seen that this bailout has not been effective.

Now aren’t you glad that they released that second half of bailout funds?


One response to “Senate Okays Release Of Second Half Of TARP Funds

  1. The Bail Out Game
    There is is new web based game called the “Bail Out Game.” It has you driving a truck load of money around a Monopoly like board while you make decisions about what companies to bail out. Economic events like stock market drops often occur. This would be hilarious if it didn’t so closely resemble reality. You can play it here. Have fun while the money lasts.

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