Changing the Rules After the Game is Over...Again

Let’s assume for a moment that you were concerned with your short-term finances and went to your Bank and took out a one year loan to temporarily boost your cash flow.  After 6 months, your financial situation has settled down so you decide to repay your loan balance in full, including interest.  Well done, back to business as usual.

Now, what if that Bank came back to you two years later and said that they were charging you a fee/levy/tax for taking out that loan two years ago and that the fee/levy/tax was required in order to make the Bank whole for bad loans it made to borrowers who were not as responsible as you and have not yet repaid their loans?  

Or what if the purpose of that fee was to help the Bank meet its yearly budget targets?  Or worse yet, what if it was required to help the Bank support the bloated benefits and pension due to its unionized employees?    

Well, that’s exactly what Barack Obama is allegedly planning to do to the 20 top Banks who participated/were forced to particiapte in the TARP program.  By claiming that these Banks benefited from the TARP program, he’s trying to justify an additional fee/levy/tax that they must pay to ensure that the TARP program remains deficit neutral - i.e. to help pay down the enormous deficits that have exploded by runaway Democratic spending on everything from non-simulative stimulus packages to health care “reform”.

The details are sketchy at best at the moment, but Obama undoubtedly sees the populist window of opportunity, and will do his best to capture that opportunity and squeeze revenue from a very unpopular industry.  Leading up to the mid-term elections it will be very difficult, politically, for any congressman/woman to vote against a bill that punishes the big bad Banks.  Nobody wants to be seen as being in bed with the “fat cat bankers,” regardless of the dangerous and anti-capitalist precedent this policy would set.

The real kicker is that most, if not all, of these 20 banks will have already paid back their loans in full, with interest, and in many cases, a lucrative kicker relating to the warrants they sold the Treasury.  Treasury Secretary Geithner himself said in December that the government stands to make a “healthy profit” on the money paid out from TARP.  Why then do these firms need to pay even more?  Because they made a profit? Because TARP was used to fund the ill-advised AIG bailout (which may eventually get paid back since AIG is actually a viable business)?  Or worse yet, because it was somehow justified to help bail out GM and Chrylser (er, their unions) with TARP funds – funds the government will never, ever see again?    

This shouldn’t surprise anyone as this administration has proven time and time again that they are ready and willing to change the rules in their favor whenever it suits them.  And we wonder why business investment and hiring hasn’t picked up.