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How Banks Use TARP Money
Harry Tuttle submits: The TARP money, which in case anyone has forgotten is a taxpayer subsidy to the largest banks, was supposed to help recapitalize the banks so that they would lend money. For people with even a tiny knowledge of accounting, like me, this was never a credible idea. Money, after all, is fungible. In other words, if you give Citi (C) $30B and it lends $30B there is no way to know how much it would have lent without a the subsidy. The Treasury Secretary knows this, but many members of Congress and other lay people do not which is why, on the one hand, they ask the banks to produce nonsensical reports about "how the money is spent", while on the other complain about the fact that they spend money to compensate their employees. Complete Story »
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How Banks Use TARP Money
Harry Tuttle submits: The TARP money, which in case anyone has forgotten is a taxpayer subsidy to the largest banks, was supposed to help recapitalize the banks so that they would lend money. For people with even a tiny knowledge of accounting, like me, this was never a credible idea. Money, after all, is fungible. In other words, if you give Citi (C) $30B and it lends $30B there is no way to know how much it would have lent without a the subsidy. The Treasury Secretary knows this, but many members of Congress and other lay people do not which is why, on the one hand, they ask the banks to produce nonsensical reports about "how the money is spent", while on the other complain about the fact that they spend money to compensate their employees. Complete Story »
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