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« Chris Whalen: Bank Bailouts 2.0 Is Coming - All Major U.S. Banks Will Need Restructuring, Government Receivership | Main | To Avoid Taxes Dick Fuld Sold His $13 Million Florida Mansion To His Wife For...$100 Dollars (VIDEO) »

Washington's Most Toxic Asset? -- A 'YES' Vote On TARP

Joe Donnelly

Bailout "Star" Joe Donnelly (D-IN) says bank bailouts are "good for America."

Political Toxic Asset Test -- How did your representatives vote on TARP?


By Dr. Pitchfork

In 2008, few of the Congressional incumbents who ran for re-election were held accountable for voting “yes” on TARP.  Fast forward two years and that TARP vote is the most toxic asset they own.

In 2008, there was only a month between the passage of the TARP legislation and Election Day.  Unless they were accustomed to following the financial markets, most voters were still trying to figure out what the financial crisis was all about and why Congress appropriated $700B to “fix” the problem.  Two years later, with unemployment hovering around 10%, the national debt out of control and the Wall St. bonus train back in high gear, voters are rightly ticked off.  And incumbents who panicked and voted for the bank bailout are about to pay the price.

One of those incumbents is Joe Donnelly (D) of Indiana’s 2nd district.  Like most of those in Congress who voted for the bailout, he remains adamant that TARP helped prevent an "economic depression," and that by standing up to his own constituents and voting against their wishes, he did the right thing.

Donnelly says that Jackie Walorski (R), his Tea Party-backed oppenent:

  • “obviously does not understand that, without these steps [i.e. TARP], credit would have completely frozen up, there would have been no loans available, there would have been bank collapses across the cocuntry and there would have been a global economic collapse.”

Readers of The Daily Bail know the deal, but just for kicks let’s unpack this statement of Donnelly’s.  Some members of Congress probably voted for TARP for purely cynical reasons, but Donnelly could be the poster boy for dumb bailout votes – he’s clearly swallowed the Bernanke-Paulson story, hook, line and sinker.  Let’s help him out a little, with some cold, hard bailout facts.

  • First, interbank lending DID NOT “freeze,” nor did TARP prevent it from “freezing.”  As researchers from FRBNY and MIT have shown, right through the entire crisis period, hundreds of billions of dollars were loaned in the interbank market – and paid back –  EVERY SINGLE DAY.  Both before and after Lehman, both before and after TARP.
  • Second, there was never a choice between A) passing TARP and B) doing absolutely nothing while the world burned.  Donnelly seems to actually believe that’s the choice he had.  What a rube.
  • Third, other means of stabilizing the financial system, besides TARP, could have been used.  How do we know?  Because they were being used AT THE VERY SAME TIME that TARP was being debated and then implemented.  The Treasury, for example, stopped Paul Kanjorski’s fabled “electronic run” on the money market funds by issuing a blanket guarantee of all money market funds on September 19 – before TARP was even passed!  The Fed intervened in the commercial paper market and nipped that problem in the bud lickety split – no need for TARP there.   Though TARP raised the FDIC limit to $250K, new legislation wasn’t needed for the FDIC to guarantee all bank deposits under a systemic risk exception – which Bair, Paulson, et al. declared almost immediately after the bailout bill was passed. Further, the FDIC also initiated the TLGP to protect bank creditors, but it could have covered bank creditors in any case under the same systemic risk exception under which it protected depositors – and not in any way, shape or form did TARP have anything to do with it.
  • Fourth, the TARP funds were originally intended for the purchase of “toxic assets” from the banks.  That’s how the bill was sold, and that’s what Congress (including Joe Donnelly) voted for.  But this plan could only “work” if taxpayers over-paid for the assets.  If taxpayers paid less than they were worth, the banks would have had no reason to sell them.  Even a panic-stricken Congressman should have known that TARP was a dumb idea just from a basic accounting perspective.  But even if you agree with Paulson’s decision to take equity stakes in the banks instead, why take that step when regulatory forbearance or a change in FAS 157 would have had the same effect WITHOUT spending taxpayer dollars?  Of course, FAS 157 was eventually changed, and with the help of Bernanke’s gift of zero interest rates, most banks paid back TARP.  What a convoluted waste.

At this point, can someone please explain to me how “global economic collapse” comes into the picture?  Everything that TARP is credited with having done, was actually achieved through actions requiring no legislation and had nothing to do with an ass-backwards capital purchase program.  Anyone?

The funniest thing about Joe Donnelly's bailout vote is that in the fall of 2008 he was telling everyone (all tough like) that “We’re going to get the Wall St. people who did this.”  Oh yes, folks, heads were going to roll.  People were going to pay the price.  Joe Donnelly was going to...   Joe Donnelly hopes you forget he said all that.  Most of the TARP bank executives are still running the firms they nearly ran into the ground, picking up multi-billion-dollar bonuses last year with the help of taxpayer subsidies, while the rest (like Ken Lewis) left with their golden parachutes.

Further, Donnelly claimed that taxpayers would get every single penny of TARP money paid back, even from AIG.  Really?  Even Tim Geithner doesn't make that claim, anymore.  And what about the fact that much of the banks’ risk has the potential to be foisted right back onto the taxpayer by way of Fannie and Freddie – whose taxpayer credit card limit was upped to INFINITY on Christmas Eve last year?  I suspect Donnelly doesn’t even know half of what’s gone on since he voted for a bailout bill he obviously didn’t understand.  (Here he is simpering about naked credit default swaps in March of 2009, but talk is cheap -- ask Obama.)  Jackie Walorski, or any candidate who makes bank bailouts a campaign issue, should beat Donnelly handily.  May he be the first of many!



Jackie Walorski

Tea Party candidate Jackie Walorski (R-IN) sits down with the locals for a cup of Joe.  Donnelly is most likely right -- she probably doesn't understand bank bailouts any more than he does.  But she's right to oppose them, and doing so is going to get her elected.








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Reader Comments (42)

Rep. Peter DeFazio Turns The Tables, Confronts Shadowy Conservative Group Running Attack Ads Against Him (VIDEO)


Interesting story...
Sep 27, 2010 at 1:03 PM | Registered CommenterDailyBail
Worm hits computers of staff at Iran nuclear plant


Sep 27, 2010 at 1:13 PM | Registered CommenterDailyBail
MADISON, Wis. — The Dalai Lama is putting his money where his mouth is.

The Tibetan spiritual leader has given $50,000 from his personal trust to support research into the science behind kindness and compassion at the University of Wisconsin-Madison.

Sep 27, 2010 at 1:13 PM | Registered CommenterDailyBail
Chuck the Home-Mortgage-Interest Deduction

Sep 27, 2010 at 1:18 PM | Registered CommenterDailyBail
Sep 27, 2010 at 1:20 PM | Registered CommenterDailyBail
Very well-written and researched story pitchfork...i can't wait for election night to watch all the incumbent tarp supporters cry and cry...
Sep 27, 2010 at 1:21 PM | Registered CommenterDailyBail
Dr. P...

Great job on that story, it is a gift to be able to write a big story on bailouts and not mention Obama once. Did you know he is extending Tarp by $42 billion? Okay, I won't spoil your fun.
Sep 27, 2010 at 1:51 PM | Unregistered CommenterZ
Washington's Most Toxic Asset: A Yes Vote On TARP

Read more: http://www.businessinsider.com/washingtons-most-toxic-asset-yes-vote-on-tarp-2010-9#ixzz10lGmAyD3

Clusterstock picked up our story...

Z...dr. p hates Obama...
Sep 27, 2010 at 3:53 PM | Registered CommenterDailyBail
Z...dr. p hates Obama...
He knows that. (That's why they call it "psychosis.")
Sep 27, 2010 at 4:01 PM | Registered CommenterDr. Pitchfork
Stop Being So Damn Bushie…

Awww, that’s so cute. Now you are all on board with the same insult. I want to play, I want to play.

For a site that professes to be so against the TARP, I am a bit confused why Obama gets a pass again. More cheap capital to the smaller banks, it was only a matter of time. This is only the first installment. They are saying it is for lending to the “small people” but we all know that is not true. It is to repair their balance sheets and stop more bank failures. The FDIC is broke so I guess OBAMA and his peons feel that the public will accept this lie as opposed to announcing another bailout for a government owned entity.

Your other story also left out Obama. I needed to coin a new word for this malady. I will call it being Bushie. It will mean, hmmm, that even Dubya Bush would think that it profusely smells and is mentally thick and stubborn. A play on words, I think it works.

So, why are you guys so Bushie if you also don’t like “the Obankster” (shout-out to Gomp). If they are all the same? It’s that hopey changey stuff you still got on the brain huh. It was hypnotism for the weak-minded. On three you will all be able to think for yourselves again and say bad things about the fraud in chief, Barry Obama. You know, the guy without the proof on his forehead.
Sep 27, 2010 at 5:20 PM | Unregistered CommenterZ
1, 2, 3, did it work for you Gobie? All are guilty...
Sep 27, 2010 at 5:38 PM | Unregistered CommenterS. Gompers
Good job Dr. P.
Sep 27, 2010 at 5:40 PM | Unregistered CommenterS. Gompers
Please press play and then read on...


Okay, now that you are in the mood...

Dem Whip: GOP majority will issue birther subpoenas
By Jordan Fabian

House Majority Whip James Clyburn (D-S.C.) warned Republicans will investigate President Obama's birthplace if they take over Congress.

"The White House will be full-time responding to subpoenas about where the president may or may not have been born, whether his mother and father were ever married, and whether his wife's family is from Georgetown or Sampit," Clyburn said in an interview published Monday on TheGrio.com, an African-American news website. "That will define the next two years of the president's administration.

OH MY GOD, NOOOOOOOOOOO!! Obama may have to make a five minute phone call to....brace yourselves...Hawaii. HEEEELLLLLLLLPPPPPPPP, something scary is stuck to his forehead.
Sep 27, 2010 at 5:52 PM | Unregistered CommenterZ
Sep 27, 2010 at 5:57 PM | Unregistered CommenterZ
It's Mourning in America...


Dr. P Shout-out...
Sep 27, 2010 at 6:08 PM | Unregistered CommenterZ
Thanks, Gomp!
Sep 27, 2010 at 6:15 PM | Registered CommenterDr. Pitchfork
Awesome post, Doc!!

You hit on every key point I can think of about TARP in just a couple paragraphs, with links to boot! I especially appreciate the TARP vote records.

One for the history books!

Oh, and Donelly sucks too, but he's not my problem. Quite frankly, you could write this post 100 times over or more, changing only the name.
Sep 27, 2010 at 8:22 PM | Unregistered Commentermark mchugh
Thanks, Mark. And thank DB for the TARP votes.

"Quite frankly, you could write this post 100 times over or more, changing only the name."

Now that you mention it.... this post SHOULD be written several times over, for each and every TARP incumbent. I'm happy to take nominations.
Sep 27, 2010 at 8:39 PM | Registered CommenterDr. Pitchfork
Great post Dr. Pitchfork, I hope your right (" May he be the first of many! ") the more the merrier.

("For a site that professes to be so against the TARP, I am a bit confused why Obama gets a pass again.") Z... I know it's hard for you to accept but TARP went down on your ol buddy George W's watch.
Sep 28, 2010 at 12:04 AM | Unregistered CommenterSagebrush
Outstanding, Dr. P., get you a case of beer for that.

This piece provides another weapon in my personal effort to show people that the whole TARP tapestry is complete bullshit, pointing out, as it does, the following. Since it was so easy to take care of toxic assets--as shown by eliminating FASB157--why the $700B charade just 6 months earlier? Why tell us you need $700B cash when a stroke of your lobbyist's pen would have done?

There are logical answers to that question, but they're all ugly. "Larceny" is the most palatable.
Sep 28, 2010 at 1:30 AM | Unregistered CommenterCheyenne
Thanks, Cheyenne. PBR?

You wrote: "why the $700B charade just 6 months earlier? Why tell us you need $700B cash when a stroke of your lobbyist's pen would have done?"

I honestly don't know. The more I've learned about the crisis and the TARP, it just doesn't make sense. Even from a criminal mindset, it doesn't make sense. My real suspicion is that Hank Paulson just panicked and he caused Bernanke to panic. That's the $700B question -- are they dumbasses or are they liars?

In any case, though, most members of Congress who voted for TARP don't know even half of what I mentioned in the post, and I would bet that 95% of those who voted yes didn't know jack doodlie squat when they voted. I mean, how many morons told people that TARP was going to get banks lending again, or whatever. How's that worked out for them? Are they stoopid?
Sep 28, 2010 at 9:52 AM | Registered CommenterDr. Pitchfork
Who knows what the TARPies thought, or why? Just vote the scum out, no matter what. I don't give a flying fuck who Harry Reid's or Judd Gregg's opponents are, incumbent banking douchewater belongs in the toilet.

Your work on exposing the TARP lie is terrific, Dr. P. For me, it's the single most important thing for Americans to get right.

Btw, this piece got picked up over at Max Keiser:

Sep 28, 2010 at 1:05 PM | Unregistered CommenterCheyenne
Just vote the scum out, no matter what. I don't give a flying fuck who Harry Reid's or Judd Gregg's opponents are, incumbent banking douchewater belongs in the toilet.


Thanks for the heads up Chey...and "incumbent banking douchewater" does indeed belong in the toilet...nice line...
Sep 28, 2010 at 1:16 PM | Registered CommenterDailyBail
Seems Low-Life Dumbasses can lye and get away with it every time. Its just how it works. Why we dont do it, its called "Respect-&-Honnor" ! Most of us could neaver stoop that low ?

Great Piece Doc
Sep 30, 2010 at 6:14 PM | Unregistered CommenterTexas Dar
Thanks, Dar.
Sep 30, 2010 at 6:36 PM | Registered CommenterDr. Pitchfork
Lies, All Lies...


U.S. regulators have concluded that Waddell & Reed Financial Inc.’s trading of Standard & Poor’s 500 Index futures spooked traders on May 6, turning an orderly selloff into a crash that erased $862 billion from the value of American equities in less than 20 minutes, according to two people with direct knowledge of the findings.
Sep 30, 2010 at 8:04 PM | Unregistered CommenterZ
DALLAS, Texas – The question has been asked – and not yet answered – in Alabama, Florida, Pennsylvania, California, Tennessee and even in San Antonio. It's also been asked in state and federal courts across the land, even in the U.S. Supreme Court, and also remains unanswered.

Maybe Dallas will be different.

Sep 30, 2010 at 8:31 PM | Unregistered CommenterZ
Rahm not Eligible to be Chicago Mayor…

Too funny, as if eligibility would stop Rahm or the Democrats.


Attorney Burt Odelson, a noted elction-law expert, is predicting Rahm Emanuel will be ineligible for mayor because he is not a legal resident of Chicago.
Sep 30, 2010 at 8:36 PM | Unregistered CommenterZ
A Sample of What Obamacare will Look Like...Government Run Incompetence…

Federal Government Demands that $27 Million Bucks be Spent to Heal Sick Street Signs...

Federal copy editors are demanding the city change its 250,900 street signs -- such as these for Perry Avenue in The Bronx -- from the all-caps style used for more than a century to ones that capitalize only the first letters.

Changing BROADWAY to Broadway will save lives, the Federal Highway Administration contends in its updated Manual on Uniform Traffic Control Devices, citing improved readability.

At $110 per sign, it will also cost the state $27.6 million, city officials said.

Sep 30, 2010 at 8:41 PM | Unregistered CommenterZ
Time for a European Vacation...Please Play Both at the Same Time...

Sep 30, 2010 at 9:26 PM | Unregistered CommenterZ
Lies, All Lies...



So what do you think it was z...it was a panic...and liquidity vanished...idiots entered market sell orders and there were no bids...i remember apple was trading around 250 that day and it dropped to 200 in a few minutes...the same thing could happen tomorrow...the equity markets look dangerous to me up here...
Sep 30, 2010 at 11:51 PM | Registered CommenterDailyBail
z...i'm going to use it...thanks...

Time for a European Vacation...Please Play Both at the Same Time...

Sep 30, 2010 at 11:52 PM | Registered CommenterDailyBail
DB, Here is a few clips from my good friend Bruce McDonald at "Kick Them All Out Projact. His news letters quit this spring when Indymac told him to get out of his own house, they just sold it on him.

His reply to me last night.......
Oh ya. Still alive and kicking. Just not doing a newsletter. Will be doing another one soon. I plopped down the $5000 so now they are in deep trouble. They can’t wiggle out of facing the music now.

And the news is filling up more and more with the fraud that is going on. See these clips Dar.

Many $$$$$ later he has them by the balls and his house back. You 2 should meet one another, same interests......


Here is is home page................

Fanny or Freddie went after him after Indymack turned his house over. He did nothing wrong, he just got caught up in this banking trap. Cost him his life savings to get it back.

Tex !
Oct 1, 2010 at 2:23 PM | Unregistered CommenterTexas Dar
Did you take down my post on Obama vs. the Golden Rule? Are you just saving it to post? Maybe I just can't find where I posted it. It was a brilliant clip...


The Golden Rule... “Do unto others as you would have them do unto you".
Obama Golden Rule… “treating others as they would treat me.”

NO! That is the funny part, NO.

I know if Sarah Palin was so self-centered and egotistical you would find the clip irresistible.
Oct 1, 2010 at 2:27 PM | Unregistered CommenterZ
T Dar..Grayson is a bit of a loon...

Oct 1, 2010 at 2:33 PM | Unregistered CommenterZ
Another strange campaign advert...


I do like the crazy music.
Oct 1, 2010 at 2:37 PM | Unregistered CommenterZ
Oct 1, 2010 at 3:10 PM | Unregistered CommenterZ
Hope Changey Osama Obama…

Obama…Osama Bin Laden…AS SOON AS I TAKE OFFICE…


THE REALITY OF OBAMA…a new Osama tape released…

Osama bin Laden tape: al-Qaeda leader criticises governments over Pakistan flood response…


The audiotape was posted on Islamic militant websites, according to the US-based SITE Intelligence Group, which monitors jihadi forums and provided a copy of the message. The tape is aired over a still photograph of a smiling bin Laden superimposed over a picture of a man distributing aid.

Bin Laden takes a softer, more humanitarian tone after the two other recent al-Qaeda messages concerning the floods.
Oct 1, 2010 at 3:29 PM | Unregistered CommenterZ
Its the "Message" , z, take time to hear what the Messenger is saying. Its not about the person, OK. Its all about the "Message" !
Oct 1, 2010 at 3:37 PM | Unregistered CommenterTexas Dar
Here Z, what do you make of this........................

Michael MooreOscar and Emmy-winning director
Posted: October 1, 2010

Five Ways the Democrats Can Avoid a Catastrophe and Pull Off the Mother of All Upsets


I do like #-3.............and #-5 just Aint Gonna Happen, not on either side.
Oct 1, 2010 at 5:10 PM | Unregistered CommenterTexas Dar
T-Dar…Huffington and MM, DB and Dr. P must be in heaven.
Subject: 5 Things Dems Can Do to Turn It Around by November 2nd

1. Immediate Wall-to-Wall TV Ads, Internet Videos, and Appearances Hammering Who the Hell Put Us in the Misery We're In.
It’s being done. Unfortunately, adding lies on top of lies is stale and counterproductive.

2. Indict the Criminals. Hmmm, does MM know why this is currently not being done? I don’t think MM is for upholding the Constitution, I guess Obama gets a pass again.

3. Announce a Moratorium on All Family Home Foreclosures.

The Dems are trying to do that and it is a crazy communist idea. MM wants to reward the wealthy and punish the poor, he is a fool.

4. Announce a New 21st Century WPA.
Spend spend spend, I think Obama has that covered.

5. Declare That No Democrat Will Accept ANY Wall Street Money in the Next Election Cycle.

Hmmmm, more lies from the Democrats is a solution?
Oct 1, 2010 at 7:03 PM | Unregistered CommenterZ

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