01.14.2010 original publish date
07.14.2010 updated/ repaired broken links
03.17.2011 repaired broken link
10.04.2012 replaced broken link w PDF
Obama Administration Returns to the 14th Century
original article written by Net Advisor™
If you borrow money from a bank or lender and pay 100% of the loan back with interest, have you repaid the loan?
Answer: Not if the lender is the Obama Administration.
In fact even if you borrowed money, money that you didn’t want to borrow in the first place, paid it back with about 20%+ interest in less than a year in many cases, the Obama Administration thinks you need to keep paying more.
Can you imagine taking out a car loan. You have a legal contract that states how much you pay each month; how long (term), and what interest you will pay. After so much time, you finally paid back the car loan.
Then months later the lender found out that you actually have been making more money then you did when you first go the loan. The lender tells you, “um, wow, you are earning a pretty good living. We know you paid off that car loan a while back with interest, but had we known your income would go up, we’ll, we would have charged you more interest, a lot more.” This would never hold up in any court in the United States, but this is what the Obama Administration is doing.
Welcome to 14th Century Politics
During the 14th Century Europe, it was a time of war, economic and social depression. There was a collapse in the financial structure (Source: Brown University, PDF). Any of this sounds familiar?
Last year, The Los Angeles Times reported on December 15, 2009, that, “Obama exhorts top bankers…”
What does ‘exhorts’ mean?
According to merriam-webster.com, exhorts means ” to incite by argument or advice : urge strongly; to give warnings or advice : make urgent appeals.”
So the Obama Administration is making an appeal to bankers, just giving some advice right? We’ll, if you don’t have a choice, and you are demanded to perform an act by way of threat, force, some people might argue this as a form of extortion. By definition, according to merriam-webster.com, extortion means:
“1 : the act or practice of extorting especially money or other property; especially : the offense committed by an official engaging in such practice
2 : something extorted; especially : a gross overcharge”
Webster cites that this practice began in the 14th century. Welcome to the 14th century.
You Got Money. We Got Legislation To Get It.
The Obama Administration seems to have difficulty with business and high paid individuals making money; high paid government officials exempt of course.
President Obama said:
“…when I see reports of massive profits and obscene bonuses…”
You heard it from the Commander in Chief. It is a bad thing for a corporation to make profits, and it is worse to pay those who made those profits happen.
Banks were begging government to repay TARP as fast as possible with interest. The government finally decided to grant APPROVAL where the banks could pay government back 100% plus interest. keep in mind that many banks didn’t want TARP in the first place (Sources: Houston Chronicle, MS-NBC, Wall Street Journal). Again, banks were given permission to pay back their TARP loans in full with huge interest: According to Bloomberg (06-10-2009):
“JPMorgan Chase & Co., Goldman Sachs Group Inc. and the eight other banks cleared yesterday (06-09-2009) to repay their U.S. government rescue money will be freed from legal limits on bonuses for their top 25 employees.
— Source: Bloomberg
The pay curbs, stricter than those already included in Treasury department rules, were inserted by Senator Christopher Dodd, a Connecticut Democrat, as an amendment to the Obama administration’s economic stimulus plan in February. They expire when a bank repays money received from the Troubled Asset Relief Program even if the government still holds warrants to purchase the bank’s common stock, according to the legislation.”
“The U.S. Treasury Department said 10 large financial firms were strong enough to return billions of dollars of emergency bailout funds to the government.”
— Source: UPI, 06-09-2009
OK, so the U.S. Treasury said, at least 10 of the banks are fine now. They can go about their business as soon as they pay back the TARP money with interest right? We’ll, not exactly.
Seven months later (January 14, 2010), that same government changes its mind, and now says, (backdoor paraphrase with emphases from perception):
‘What you are profitable!? You can’t be profitable! We don’t want you to succeed, we wanted you to fail so we can control your industry just like the largest insurer AIG, the largest auto company General Motors, the largest mortgage lenders Fannie Mae and Freddie Mac. What do you mean you are profitable again, how dare you make money!’
So the Obama Administration says to the banks,
“We want our money back”….(and) “If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers,” Obama said.”
— Source: The Seattle Times Company, 01-14-2010
Now keep in mind that the major banks that the President had been referring to had already paid back 100% of the money they did not want to borrow in the first place plus interest, and they did so only after getting permission from the government to pay back the loan, and all of this was done about 6 months ago. Clearly this Administration is anti-business, anti-profit, and they will do whatever they can to control the industry and insure that no one is profitable under Obama & Company.
Try not to get sidetracked by the political rhetoric and sound bites. Look at the facts, which do go beyond a headline and judge for yourself.
A hypothetical conversation based on the data said hereto in simple terms:
The banks to the U.S. Gov (that paid fully repaid TARP with interest last year) (from hereon “The Banks”):
The banks:
Um, we already fully repaid you…last year…with high interest.
Obama & Co. :
Nope, that was not enough, we want more money.
The Banks:
What for?
Obama & Co. :
Because you made a profit 6 months after you were not under our control, and paid back your loan. And because you paid out “obscene” bonuses.
The Banks:
You told us we were healthy. Isn’t that what we are supposed to do in a free enterprise system…make money?
Obama & Co. :
You’ve forgotten that the People voted for Socialism (2008 Election). We will tell you what to do, how to run your business, how much and when you will pay us. We will make the laws however we see fit. We are your new government, and we want total control over your lives, and that means your wallet too.
Now there may be a bit of sarcasm and satire here, but if it walks like a duck, talks like a duck, and acts like a duck, isn’t is safe to assume that it is a duck? This is basically what is happening in the U.S. under the Obama Administration. The government is seeking to get more money beyond what they were legally owed, and they will get it.
President Obama wants the succeeding banks to pay for other banks that have technically are still failing. Obama wants another $117 Billion from what amount as the 50 largest healthy banks. This is addition to the increased FDIC insurance fees banks will be paying to really help bail out the FDIC. The banks are also facing a proposed $150 billion more for “future big-bank failures.” Isn’t that what the FDIC fees are for? Yes, but we want another $150 Billion on top of all that.
Question:
How did the Obama Administration come up with such perfectly round numbers they want banks to pay?
Answer:
Thin air. There was no data given to come up with any of these addition demands from the Obama Administration. It was just made up.
The Administration said they want this money in part for future big bank failures.
What future big bank failures?
Is there something the government knows that we don’t? Does the government expect big banks to fail in the future? Why not let them fail now and save all this tax payer money, pay down the debt or refund it back to tax payers who needs it the most? The government doesn’t need money, they are spending it like its ‘1999.’ They just print it. Tax payers can’t do that, legally anyway.
Never mind that the government doesn’t just allow the failing banks (and others) to stop bleeding tax payers by bailing out a failed business. Instead, make the survivors pay for their competitors problems. We, (the Obama Administration) think that’s fair.
Government Taxes Business, Consumers Pay.
What the Administration does not get is that if you place a tax, levy, special fee, or whatever on a business, that business will just find a way and pass on that cost to the end users, the consumer aka the tax payer.
In July 2009, the banks were already set out to increase fees to customers to offset their losses.
The Obama Administration (via Congress) has placed new rules for credit card issuers (the banks) dubbed the “Credit Card Act of 2009” (H.R. 627) This law did not go into effect until January 5, 2010. The banks had time to run and raise their fees to offset what is expected as a $50 billion in lost bank revenue. The banks say the fees are necessary to offset the mortgage and other loan defaults.
“The nation’s biggest banks — those that received the biggest bailouts from taxpayers, and are once again gaining strength — charge fees that are on average at least 20 percent higher than those at smaller lenders, according to Moebs Services, a economic research firm used by banks and federal regulators.”
— Source: CNBC
This is probably a good excuse by the banks. Another reason for banks to increase fees is to do it before the new Obama bank fee laws go into effect. If we had no new Obama bank fee regulation, would we have a sudden jump in bank fees?
As much as no one likes to pay fees, but we do have a choice. Choose another business to do business with. That is how the free market works. Not everyone pays the same fees for the same services. If consumers just moved their business to institutions that offered similar service for less fees, that can force other banks be more competitive.
But it is wrong for government to try and ‘extort’ money from business or people when they have a earned it. Passing laws to penalize success is not what America was built on. In the end, the consumers will end up paying for that special government tax, levy, fee, etc, on businesses. And that my friends, limits our ability to choose.
image credit © Washington Post
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