主题：04/21/2009 Market View -- 宁子

Opposing views: $700B versus $3T.

All during Treasury secretary Geithner's testimony the number $750B was tossed around as the amount of money available under the TARP. Geithner advised Congress that there was roughly $110B left to fund the banks and that should be sufficient to get the job done.

Great. But, surprise, not all agree with the Secretary. Indeed, the 'TARP top cop' as some call the gentleman in charge of oversight for the TARP says that when you include the direct spending, loans, and loan guarantees the amount is closer to $3T.

$750B or $3T. As one former senator put it, the Secretary left more questions than answers. Questions about just how much money is really being spent, questions about how banks get out from hock, questions about how anyone will tell what banks are fit, and questions about how we will know the program is a success.

Thus as is often the case when the government is involved, there are no answers, just a lot of money getting tossed around in the belief that money solves all issues. Education issues? Money. Healthcare? Money. Energy? Money, but not for a combination of methods to cut dependence on foreign sources and bridge to the next fuel source(s). Thus it is not very surprising there were more questions than answers at the oversight hearing that was to produce answers to everyone's questions. Any questions?

Rumor to become fact, but what happens if some banks actually fail?

As reported over the weekend and on Monday, the Administration, in collusion with key members of Congress, is not going to let the big banks, or at least all of them, out from under the TARP. Ostensibly it is to 'make the public whole' but if the companies return all of the money is not the public made whole?

What is really planned is control of key financial institutions in the US by virtue of converting preferred shares to common shares, giving the federal government the largest block of shares in many of these institutions. As most business in the US has to go to these banks in order to conduct business, the majority ownership allows the feds to reach all aspects of business without ever having to pass any laws or worry about constitutional limitations. How this is not being shouted down all across the nation is mindboggling.

Now some are saying this is just rumor with no actual statement of intent to do so. But as we have seen, this is how information is disseminated and the masses primed for the actual news. This Administration leaks out the information in rumor form and then it confirms it in one form or another. Thus expect the program to be announced when the stress tests are complete.

Ah yes, the stress tests. Shrouded in secrecy and indecision as to whether to release the details or not. If they release them there could be runs on banks, right? So, don't expect many details. It, as was the original 'take it or get audited and live in hell' offer to banks for the TARP funds from Paulson, is going to be kept secret and we will simply be told that the banks just were in worse shape than feared and had to be commandeered. Geithner was already talking of the issues at today's hearing, how banks were still having serious issues. It is all leading up to the announcement as the stress test results are pretty much predetermined.

What happens, however, if the banks, despite the federal intervention and ownership, still fail? It can happen because citizens will not stand for more money going into the banks, US common share ownership or not. If it does, where in line do common shares stand? In the back. At that point will taxpayers think it better to let the banks repay the money and get on with lending and making money so the economy can grow again or play out some control scheme some in Congress have always wanted to implement?