Daniel Gross over at Slate calls out the banks whining that the TARP billions they took are tying them down.
He’s good on Bank of America’s Ken Lewis, who gave an interview to the Financial Times the other day saying it was a “tactical mistake” to take so much government money—because it made the markets think it needed it.
To which Gross says:
If he had it to do over again, Lewis said, he would have taken $10 billion less. This is rich on many levels. The market, in its wisdom, has decided that Bank of America is worth about $18.5 billion. Let’s do a simple thought experiment. If Bank of America had received $10 billion less in cheap, taxpayer-provided capital to soak up losses at Merrill Lynch, would Bank of America’s stock be a) higher, or b) lower? And the mistake of taking too much TARP capital would seem to be an easily reversible one—Bank of America could pay it back or at least return some fraction of the $45 billion it has received. But Bank of America hasn’t done that, either. In the interview, Lewis said the bank would pay back the taxpayers “as soon as we think things are stabilized.”
Kenny also could have used some of that $3.6 billion Merrill paid out in bonuses just before he acquired it.