Monday, August 3, 2009
TARP
What are yout thoughs on the TARP fund?(Troubled Asset Relief Program). This is a government fund that is used to bail out financial institutions that are in difficulties. This is causing controversy among different groups and in my opinion, acceptance or rejection, is greatly polarized by partisan politics. Let's talk about this.
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With banks and other institutions experiencing anticipated great results from TARP fund loan received, most of these banks are getting ready to dish out large bonuses to their top executives. Based on most of their track records, one can easily deduce that the primary reason why these banks and the world economy are going through problems is stemmed from bad spending practices. However, I am not quite sure if there was any lession learned since these same institutions are repeating the same acts relating to high bonuses which are directly related to the bad spending practices. I had the impression that there was common understanding of the reason we are in this mess and the sole purpose of TARP loan was to get things back to norm and repeat of the practices that got us in the mess would not be revisited. This is obviously not the case.
ReplyDeleteNow that there is a projected 117 billion dollars shortfall in the Government's finincial crisis bailout fund and there are plans in place to levy taxes on the big banks, I am more than willing to endorse that move by the Government. Of the 700 billion dollars TARP fund (taxpayers' money) used to rescue banks and Wall Street firms, auto companies and mortgage holders, most have already been paid in some fashion so Congress will have to approve this tax. Also, this tax levy will only be administered to institutions with assets of 50 billion and over.
With all being said, I have one question that lingers with me and that is; do you think that imposing these taxes on TARP recepients is more of a punitive move than the prevailing of sensible economical practices?