Market Minds

Today several financial companies were given permission to repay their TARP crutches. The market yawned. As expected, nowhere in Geithner’s prepared statement was there even a brief mention of that “other” crutch, the TLGP subsidies that banks have used over the past 6 months. And as TARP is to bank equity, so the FDIC’s TLGP is to debt (Zero Hedge has written extensively about the program in the past). The debt guarantee issue is a global phenomenon: not only focused on the US. In fact, the total crutches provided by developed countries to their banking systems currently amount to roughly half a trillion dollars, so when banks succeed in paying off about 10 times more than they did today, please let us know. Unfortunately, for that to happen to S&P will likely need an invisible hand boost well in the 3-4,000 range. That’s a whole lot of share recall notices that State Street and BoNY would have to issue

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Perspectives On TARP Repayment