Is There A Law Against Returning The TARP Money?

Atrios writes:

How many stories will our credulous press write about how big financial institutions are on their knees begging to be allowed to give back all the free money they were given. You know, when they can... maybe... some day! It's absurd.

Six months after accepting a financial lifeline from Washington, a newly profitable Goldman Sachs is pushing to return the billions of taxpayer dollars that it received in an effort to extricate itself from heightened government control.

It is ridiculous. Just give back the money. If you can. If you can't, well, then you are not doing all that well are you? More on the flip.

In the article, the reporter writes:

Goldman is not allowed to return the money without the approval of the Treasury and the Federal Reserve, which both declined to comment on Monday.

I do not believe that is true. I ask again, is there a law that says this? It is not the TARP law (PDF). What law says this?

Speaking for me only

< Do the Restrictions On Cuba Travel Violate The Constitution? | What Happened In December At Goldman? >
  • The Online Magazine with Liberal coverage of crime-related political and injustice news

  • Contribute To TalkLeft

  • Display: Sort:
    The banks don't want to pay the warrants (5.00 / 1) (#4)
    by caseyOR on Tue Apr 14, 2009 at 10:27:14 AM EST
    Banks that took TARP money had to give the government warrants. When the banks pay-off the TARP loans they must make good on the warrants, and they don't want to. Yves explains it here.

    If there is a bigger group of crybabies than the banksters, I certainly don't know who it would be.

    Your Link (none / 0) (#5)
    by MO Blue on Tue Apr 14, 2009 at 10:32:47 AM EST
    did not work for me.

    Let me try this again. (none / 0) (#9)
    by caseyOR on Tue Apr 14, 2009 at 10:38:12 AM EST
    Try this linkand scroll down to the article about banks and TARP and warrants.

    Let me try yet another times. (5.00 / 1) (#10)
    by caseyOR on Tue Apr 14, 2009 at 10:45:37 AM EST
    Thanks (none / 0) (#11)
    by MO Blue on Tue Apr 14, 2009 at 11:04:30 AM EST
    That link worked. Interesting article. Thanks for providing the info.

    The warrants were in the initial terms... (none / 0) (#16)
    by roy on Tue Apr 14, 2009 at 01:44:46 PM EST
    ... but other conditions have been unilaterally added since.  Or at least that's my impression -- I haven't read the entire TARP law.  I'm not Congress's clipping service.

    The Goldman profit is less (none / 0) (#1)
    by caseyOR on Tue Apr 14, 2009 at 10:12:46 AM EST
    Exactly... (none / 0) (#2)
    by kdog on Tue Apr 14, 2009 at 10:22:09 AM EST
    I'd even help out and fill out the check to speed this thing up, all they have to do is sign it.  Sh*t I'll pay for the stamp.

    Same applies to those that say they want to pay higher taxes...just cut a check and mail it, no one is stopping you.

    If there is no law then why the problem with (none / 0) (#3)
    by Buckeye on Tue Apr 14, 2009 at 10:24:01 AM EST
    paying it back?  If it does not get what it wants from the government (relaxation of control) it will keep the money?  Should it be able to keep the money now that they have proven they can pay it back?  I do not understand.

    Goldman Converted To A (none / 0) (#6)
    by santarita on Tue Apr 14, 2009 at 10:33:04 AM EST
    bank so that it could receive access to various governmental credit facilities that were available only to banks.  That disadvantage of that decision was that it subjected itself to more federal regulatory oversight.  I believe that Goldman was one of the nine institutions that were required to take $25 billion in TARP money.  The federal regulators have the authority to require the financial institutions to hold on to the TARP funds for a variety of reasons - one may be that an individual bank may not think it needs the funds but the regulator does.  Another reason may be that a return by some but not all the institutions would suggest that those not returning the funds are in worse condition.

    So I believe the only legal authority you will find is the general regulatory authority that the federal regulatory authorities have.

    So the Fed is running Goldman? (none / 0) (#7)
    by Big Tent Democrat on Tue Apr 14, 2009 at 10:35:28 AM EST
    That's just awful . . .

    Treasury Is... (none / 0) (#13)
    by santarita on Tue Apr 14, 2009 at 11:21:11 AM EST
    probably more responsible for regulatory oversight of Goldman.  (Treasury includes the OCC.)   And, yes, Goldman probably thinks that the government is running its business.  But that was a price for taking advantage of some of the government credit facilities.

    Is the real problem that "forcing" (none / 0) (#8)
    by Anne on Tue Apr 14, 2009 at 10:37:10 AM EST
    the financial institutions to keep the money is the only way the government thinks it has to regulate them in areas where there is a regulatory vacuum?  

    And if this is the reason, why isn't the administration working with the Congress to put that regulatory structure into place?

    Or does the administration already know that even with increased regulation, it is unlikely that that regulation would include some of the things that are currently being held over the TARP fund recipients' heads?

    The Regulatory Reform That Has... (none / 0) (#12)
    by santarita on Tue Apr 14, 2009 at 11:18:22 AM EST
    been discussed will regulate previously unregulated or lightly regulated financial institutions and will create a superregulator or at least one agency that has oversight authority over systemically important institutions.

    Metlife... (none / 0) (#14)
    by MileHi Hawkeye on Tue Apr 14, 2009 at 11:32:17 AM EST
    ...says thanks, but no thanks to TARP funds.

    What would be the legal significance? (none / 0) (#15)
    by roy on Tue Apr 14, 2009 at 01:23:13 PM EST
    If the banks write a check to the government, I'm sure the government will be happy to cash it, but that may not constitute "paying back" anything in any useful sense.  It'd be good PR, but have no legal significance next time the feds want to influence the bank based on its acceptance of TARP money.  It would be like me paying off my car loan while Chrysler Financial keeps a lien on the title, or paying off a mortgage while the lending bank keeps the right to foreclose on and auction my house if I don't live up to the other terms of the mortgage.  I wouldn't fault a borrower for expecting better terms than that before paying anything back -- and neither would the other posters here if the borrowers were more lovable.

    If you had some credit card debt, and the card issuer intended to not only continue to charge interest on what you borrowed regardless of whether you pay it all off, but invent new retroactive terms to your "agreement", you'd be reluctant to just write a check too.

    The expression... (none / 0) (#17)
    by kdog on Tue Apr 14, 2009 at 02:28:22 PM EST
    "lie down with dogs, come up with fleas" comes to mind.