Happy holidays to all and best wishes for 2009. It has been a year unlike few living have witnessed before. Alas, 2009 has been set up for an impressive encore of capital dislocation and volatility.
The expansion of TARP participants has reached preposterous proportions. The loans that were granted to General Motors and Chrysler were funded by the TARP. In addition, the following corporations have applied for bank holding company status so they can participate as well. As you recall, Goldman Sachs and Morgan Stanley converted to bank holding companies a ways back to save their skins. Oh, don't forget about AIG. TARP funds were used in that rescue too.
- American Express: conversion complete, awaiting $3.5 billion in funds
- GMAC: conversion approved this week, potential $6 billion in funds available
- Genworth Financial: in the process of acquiring a bank and converting thereafter
- Hartford Financial: in the process of acquiring a bank and converting thereafter
- Lincoln Financial: in the process of acquiring a bank and converting thereafter
- Protective Life: in the process of acquiring a bank and converting thereafter
- CIT Group: conversion approved, potential $2.5 billion in funds available
- Discover Financial: conversion approved, potential $1 billion in funds available
Is this really what the TARP was intended for? There is no penalty for making a poor business decision. All a company needs to do is file some paperwork and the taxpayer pays the bill.
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