You may have missed the fact that 10 banks were allowed to repay TARP money this week. I find it interesting that many months of impassioned TARP discussions would result in a rather silent repayment of the funds this week. Scanning this morning's headlines across several financial websites and news channels, there is scant evidence of this monumental event. I did learn about another ponzi scheme arrest, and a highly respected financial publication is reporting that TARP recipients had executives using corporate jets for personal use. Whether you feel that negative news sells better or not, is not up for debate in this newsletter. The point I wish to reflect on today is the significance of TARP repayment.
Some would consider it shocking that financial firms would be able to repay the money so quickly after it widely believed that the BANK BAILOUT was a waste of taxpayer's money with little hope of ever being repaid. While it was admittedly unpopular when introduced by the previous administration, it was an active step toward a solution. Again, not debating whether it was the right choice, but glad that a decision was made to do something as opposed to nothing. Now that the money is rolling back into Washington, it will be interesting to see if it applied to the deficit, or to fund a different program. Clearly, the banking industry has much to prove before it is no longer considered at risk. The optimist in me feels that the healthiest banks will lead the way to recovery, and will most likely not need more reserves than they have at this time.
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