(Update: 6/16/09: Fed Strongarmed Bank of America over Merrill Lynch)
I am happy to hear that US Bancorp’s CEO Richard Davis is still above ground and breathing. It is a sad day in Amerikka when I have to write words like that because I believe that people being taken out by “the system” actually happens here, AND people keep asking me about helicopters over my house.
On February 18, I wrote “Tarp 1 Was to Ease The Credit Crunch, Not So Much…” about US Bancorp’s CEO, who had come out of the shadows and explained that no matter if a bank needed the TARP funds or not, they were going to take them. Here is an excerpt:
But Davis was critical of the U.S. Treasury’s Troubled Asset Relief Program introduced last fall, saying that while the program was well intended, it has turned out to be “lousy.”
Created to encourage lending to small businesses and consumers, TARP started by shoveling tens of billions of dollars at the country’s biggest banks but soon was expanded to include banks of all sizes. Minneapolis-based U.S. Bancorp got $6.6 billion.
“I will say this very bluntly: We were told to take it. Not asked, told. ‘You will take it,’ ” Davis said. “It doesn’t matter if you were there on the first night and you were told to sign on the dotted line before you walked out of the office, or whether in the days that followed, you were told to take it.”
But by Tuesday afternoon, a U.S. Bancorp spokesman said Davis had misspoke, and meant that because the largest banks in the country took TARP money, U.S. Bancorp and others were forced to do so as well, for competitive reasons.
Last week Judge Napolitano spoke about the “exhortion” factor involved with the banks and the TARP Money.
By Judge Andrew Napolitano
FOX News Senior Judicial Analyst
The Federal government committed extortion and they’re not being held accountable. What’s next? Listen to this: I recently met with the Chair and CEO of one of the country’s top 10 bank holding companies. His bank is worth in excess of $250 billion, has no bad debt, no credit default swaps, no liquidity problems, and no subprime loans. He told me that he and others were forced by Treasury and FDIC threats to take TARP funds, even though he did not want or need them.
“There is simply no authority in the U.S. Constitution for Congress to exercise the level of control it now seeks over private industry.”
The FDIC — with Treasury backing — threatened to conduct public audits of his bank unless his board created and issued a class of stock for the Feds to buy. The audit, which he is confident his bank would survive, would cost it millions in employee time, bad press, and consequent lost business.
He pleaded with the Feds to leave his successful bank alone. He begged his board to let him tell the Feds to take a hike. But they gave in. The Feds are now just a tiny shareholder, but want to begin asserting more and more control. This is a classic extortion: Controlling someone’s free will by threatening to perform a lawful act. (Blackmail is the threat is to perform an unlawful act in order to control someone else’s free will.) There are no exceptions in the statutes prohibiting extortion for government persons
This happened in September 2008, but the demands for more control are more recent. It sounds to me like Paulson, Geithner, Bernanke, and Sheila Blair have all read a biography of Benito Mussolini. I guess they skipped the last chapter.
There is simply no authority in the U.S. Constitution for Congress to exercise the level of control it now seeks over private industry. In fact, this level of control will wind up costing the businesses that took TARP (voluntarily or involuntarily) money since they will lose key employees who will go to work elsewhere and because the reporting requirements will take time and time is money. The Constitution basically says that if the government wants to take time or freedom or money from someone or something, it must sue for it. It cannot just give itself the authority to do so via legislation.
Everbody has read the Stuart Varney piece in the Wall Street Journal, but here is the actual event that editorial was based on:
From the White House, there were five principal attendees: chief of staff Rahm Emanuel, who arrived a few minutes late, Treasury Secretary Timothy Geithner, Council of Economic Advisers chairwoman Christina Romer, senior adviser Valerie Jarrett and director of the National Economic Council Larry Summers. Uncharacteristically, Summers said almost nothing, and it appeared to one participant as if he had been told to remain silent.
To break the ice, JPMorgan Chase CEO Jamie Dimon offered Geithner a fake check for $25 billion, the amount of Troubled Asset Relief Program money that the company has accepted. Although many of those in the room laughed, Geithner didn’t keep the check.
JPMorgan’s Dimon spoke first. He began by complimenting the president on the economic team he’d assembled. And he said his industry needs to explain more directly to the American people that the economic recovery plans are already working. Dimon also insisted that he’d like to give the government’s TARP money back as soon as practical, and asked the president to “streamline” that process.
But Obama didn’t like that idea — arguing that the system still needs government capital. The president offered an analogy: “This is like a patient who’s on antibiotics,” he said. “Maybe the patient starts feeling better after a couple of days, but you don’t stop taking the medicine until you’ve finished the bottle.” Returning the money too early, the president argued could send a bad signal.
Several CEOs disagreed, arguing instead that returning TARP money was their patriotic duty, that they didn’t need it anymore, and that publicity surrounding the return would send a positive signal of confidence to the markets.
Bank of America CEO Ken Lewis cracked a joke at the expense of his peers who’d lavished praise on the administration: “Mr. President,” he said, “I’m not going to suck up to Geithner and Summers like the other CEOs here have.” Lewis also urged the president not to paint all the banks with the same broad brush.
The president argued that’s not what the White House was doing. Indeed, earlier the same week, Obama said at a nationally televised news conference, “The rest of us can’t afford to demonize every investor or entrepreneur who seeks to make a profit.”
As the meeting wound down after nearly an hour and a half, the CEOs hustled out to live television positions on the White House grounds, where many gave interviews to CNBC.
It had been a landmark day in the history of American capitalism. Unbeknownst to the financial executives, General Motors CEO Rick Wagoner was also on Pennsylvania Avenue that day, meeting with Obama’s auto bailout task force. Although the finance CEOs got a meeting with the president, Wagoner saw only Obama’s senior advisor Steven Rattner at the Treasury Department. During the meeting, Rattner demanded Wagoner’s resignation.
It had been a tough day for CEOs in the nation’s capital.
It is the common consensus among us little people that Rick Wagoner was made an example of to other bailed out executives to tow the line or else. It is also not that hard a jump to say it was two birds with one stone considering Frederick Henderson’s background; “Meet The New CEO Of GM“.
Is there a congressperson or senator out there that is willing to bring even thinking about bringing impeachment proceedings against this usurper-in-charge for any number of bad judgement calls starting with not “allowing” banks to repay TARP money as was promised to us, the taxpayers, way back when?
The Judge with Glenn Beck: