Yesterday, many banks escaped from the Troubled Asset Relief Program (TARP) — and last night they were celebrating their good fortune at their favorite taverns.
Don’t miss the lead story in today's New York Times, describing how these bankers were toasting their triumph, confident that happy days are here for them, that their pay will further improve "even if the broader economy does not.”
Banks were given trillions of dollars to loan, but they didn't loan, and now they are paying back the money, and still don't loan. The president will impose compensation limits on banks that receive TARP money, once they no longer receive TARP money. He will gently, politely ask the other banks to limit compensation, and while they lift their next brew, they will gently, politely ignore him.
The stories spread by the day: retreat on compensation, surrender on major financial regulation, rise in credit card interest rates, continuing sharp uptick in foreclosures, refusal by banks to lend. The president opines; Geithner claims credit; Paulson is triumphant; Republicans applaud the magic of the market; both parties continue their banking fundraisers; bankers lift a brew in celebration because for them, happy days are here again — even if they are not for us.