Rusty Law

Stretching the TARP

Bank of America repaid its $45 billion debt, an action expected to prompt other banks to repay their bailout money, and now the Treasury Department will extend the Troubled Asset Relief Program beyond Christmas and New Year’s Eve, past Easter straight through to Halloween of 2010.  

Just as homeowners face new requirements in the extended version of the first-time home buyer tax credit, TARP will be striped with updates to its coverage.  While TARP is now projected to cost less over a 10 year period, it will be limited to foreclosure prevention and providing capital to small banks and businesses, hoping to shade business and consumer loans from the sun of a harsh economy.  

It may not be a new bank holiday, but the Treasury Department vows to give out goodies into Fall of 2010.  

Bank of America Emerges from TARP

It is not April 15, but Bank of America is ready to pay Uncle Sam.  These are not taxes, though; this is the $45 billion loan Bank of America received through the Troubled Asset Relief Program or TARP.  

Prior to mergers and acquisitions, Bank of America was the Bank of Italy (country of the cradle of banking) and was founded in San Francisco in 1904 by A. P. Giannini.  It dominated banking in the United States and has gone through many changes to be nearly unrecognizable except by its namesake.  Regardless, when it recently became too big to fail, the Federal Reserve bailed it out first with $25 billion in October 2008, then an additional $20 billion in January when Bank of America took over the Merill Lynch mob.    

Bank of America will be the first of seven companies owing big money to the Fed to peek out from underneath the TARP.  The bank’s action should prompt the other six to repay the government with a debt of gratitude and at a good rate of return.  

Once the debt is repaid, Bank of America executives can enjoy their lunch out from underneath the bailout stigma.  Without compensation restrictions, they anticipate an easier time recruiting and retaining key personnel.  

Not everyone is ready to repay his or her loan.  If you are seeking shelter in a foreclosure case, and you are not a billion-dollar bank, you may wish to consider a legal defense or other legal options to help you get back on firm financial footing.  Put a foundation in place which you can stand on, and rebuild your assets.  I encourage you to seek your options.  No one should go through foreclosure alone.  

Bankers' Hours

Bankers’ hours have been reduced by 122 failures this year.  Banks are folding faster than paper money, but they have not reached the 179 savings and loan record closings of 1992.  It is November, hurricane season is nearly over, and the FDIC may not have time this year to address the 400 plus “problem” lenders they tallied in mid-2009. 

Yes, the FDIC has made a list, they are checking it twice, and they are going to find out which lenders are naughty and nice.  Furthermore, for the first time in history they are mandating that premiuims be paid in advance.  This will help replenish their recent rapid outpouring of insurance funds by about $45 billion.  

Do not count on extended lobby hours any time soon, but at least we have online banking.