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Occupied By Wall Street – The Latest TARP Taxpayer Screw-Job Is Revealed

Tyler Durden's picture




 

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The Treasury-created market has benefited a few savvy investors, while saddling taxpayers with a loss. Three private funds, which the report didn’t name, have won almost half the shares available at auction, often netting either a profit on paper or on the resale, according to the special inspector general for the Troubled Asset Relief Program. The Treasury, which has held 185 auctions to date, said it has raised about $3 billion on TARP investments that were originally valued at $3.8 billion, for a loss of $800 million at the auctions.

 

The Treasury “set up this market where investors could come in quickly and flip and profit,” said Christy Romero, TARP’s special inspector general, in an interview.

 

– From the Wall Street Journal article: Hedge Funds, Private Equity Win Big at TARP Auctions

One story that I’ve told several times on this site has to do with the day TARP passed. How I got into work extremely early and starting irately yelling about how TARP represented the end of America as we knew it. There weren’t many people on the trading floor at the time, but my boss was there and he told me to take a “walk around the block.” I politely declined, but continued to seethe at my desk.

It’s almost shocking to see the horrific transformation that has occurred in the subsequent six years. It’s so bad, that many people now take things that would’ve been considered unconscionable just a few years ago as part of the “new normal.” There will be a horrible price to pay for this perspective.

The latest scam unveiled by the Wall Street Journal is just the latest example of how and why all the income during the oligarch recovery has gone to, well, oligarchs.

From the Wall Street Journal:

WASHINGTON—A government program to rid itself of TARP investments in small banks has proved a boon to hedge funds, private-equity and other private investors, according to a new watchdog report.

That’s the least surprising thing I’ve read today.

As the Treasury Department looks to exit from its taxpayer-backed investments in these lenders, private investors like hedge funds and others have stepped in and scooped up about 70% of the shares auctioned by the U.S. government. Other buyers included banks, institutional investors and brokers buying shares on behalf of other entities.

 

The Treasury-created market has benefited a few savvy investors, while saddling taxpayers with a loss. Three private funds, which the report didn’t name, have won almost half the shares available at auction, often netting either a profit on paper or on the resale,according to the special inspector general for the Troubled Asset Relief Program. The Treasury, which has held 185 auctions to date, said it has raised about $3 billion on TARP investments that were originally valued at $3.8 billion, for a loss of $800 million at the auctions.

 

The Treasury “set up this market where investors could come in quickly and flip and profit,” said Christy Romero, TARP’s special inspector general, in an interview.

 

As the new owners of the bank’s shares, the funds can profit by reselling them back to the bank at a premium. At one auction, the report said, a bidder won the shares for $3 million less than taxpayers had originally paid. Eight months later, the same bidder sold the shares back to the bank at a $1.6 million profit. Banks sometimes repurchase the shares to avoid dividend payments, which are generally at 9% of principal, or because they don’t want to owe money to the outside investors.

 

Treasury officials say the risk of losing money at the auctions was necessary to ensure taxpayers weren’t holding the potentially risky bank investments for years to come.

Yes, suckers, it’s for your own good.

A Hildene fund that holds the vast majority of the firm’s TARP holdings gained about 18% last year, an investor update shows, five times the pace for hedge funds overall tracked by HFR Inc.

Further proof, as if you needed any, that crony insider deals is where the real money is.

EJF Capital LLC, the $6 billion Arlington, Va., hedge-fund firm, also holds a large stake in TARP securities, according to investor documents reviewed by The Wall Street Journal.

Naturally, based in Arlington. Right in the belly of the cancer.

“As a banker I was happy, but as a taxpayer I was not at all happy,” said Chief Financial Officer Donald Boyer. “The discount came out of taxpayers’ pockets.”

Yep, that pretty much sums up everything that’s happened since TARP first passed.

 

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Thu, 01/29/2015 - 23:55 | 5723622 Cognitive Dissonance
Cognitive Dissonance's picture

Yes....but did it FINALLY release the animal spirits so we can get this 'recovery' on the road?

"God bless those (central) bankers one and all for saving our bacon once again." - Tiny Tim

 

sarc/ just in case it wasn't obvious

Thu, 01/29/2015 - 23:58 | 5723641 nink
nink's picture

For sale paper gold exchanable for paper not gold. Anyone, Anyone?

Fri, 01/30/2015 - 02:07 | 5723671 Solon the Destroyer
Solon the Destroyer's picture

They don't need to go Gold yet.  Not while the Fed is offering the bribe of taxpayer money to frontun them...like they have been doing since the peak in interest rates back in the 80s. That decades-long ongoing bribe is what keeps the Ponzi going.

In Peg Bundy"s voice: "thank your government, taxpayers."

The Swiss taxpayer is about to feel how much that bribe costs when your central bank is in deep trouble. Bond specs are going to spank the SNB for as long as they want for what they have done to their yield curve.

Fri, 01/30/2015 - 08:38 | 5724268 max2205
max2205's picture

Tarp QE......what's the difference 

Fri, 01/30/2015 - 01:10 | 5723800 glenlloyd
glenlloyd's picture

Once again I am thoroughly disgusted with these people...thoroughly.

Fri, 01/30/2015 - 02:32 | 5723929 fascismlover
fascismlover's picture

Long Guillotine manufacturing.  I am available for an apprenticeship.  It can't pay worse than our current reality but there is that added benefit of doing something good for humanity.  I will only work at a mass-producing Guillotine operation.  

Fri, 01/30/2015 - 03:26 | 5723989 boattrash
boattrash's picture

This is a perfect example, of why I posted the dark response below, to the article "What Would You Do?" (if you could print counterfeit)

I wouldn't waste a penny, OR get greedy! I'd simply buy every politician, public servant, LEO, clerk, Etc... that was willing to be bought, then have them over for a party, bend 'em over and screw 'em in the ass with a barbed-wire wrapped dildo til they pass out, next stop, the guillotine.

Then I'd place all the heads on pikes, open my lawn chair, (bought previously w/hard earned $$) and sit back enjoying the view.

Fri, 01/30/2015 - 09:37 | 5724473 Ward cleaver
Ward cleaver's picture

Oh come on, Wall Street has been scamming
the markets for years, Zirp, HFT, stock repurchases
Insider trading etc. this is news?

Fri, 01/30/2015 - 09:24 | 5724404 astroloungers
astroloungers's picture

They're pretty much just doing gods work.......I guess how you feel about it depends on which God you worship.

Thu, 01/29/2015 - 23:56 | 5723627 Arrowflinger
Arrowflinger's picture

TARP proved that America was lost.

Fri, 01/30/2015 - 00:02 | 5723654 Money Boo Boo
Money Boo Boo's picture

shipping Africans across the atlantic to pick cotton for their new masters proved America was lost!!! but that's too hard a pill for most white supremists to swallow.

Fri, 01/30/2015 - 00:36 | 5723714 Doubleguns
Doubleguns's picture

 

Where did the supply of slaves come from? First, the Portuguese themselves kidnapped some Africans. But the bulk of the supply came from the Nigerians. These Nigerian middlemen moved to the interior where they captured other Nigerians who belonged to other communities. The middlemen also purchased many of the slaves from the people in the interior . . . . Many Nigerian middlemen began to depend totally on the slave trade and neglected every other business and occupation. The result was that when the trade was abolished [by England in 1807] these Nigerians began to protest. As years went by and the trade collapsed such Nigerians lost their sources of income and became impoverished. 4

In Ghana, politician and educator Samuel Sulemana Fuseini has acknowledged that his Asante ancestors accumulated their great wealth by abducting, capturing, and kidnapping Africans and selling them as slaves. Likewise, Ghanaian diplomat Kofi Awoonor has written: “I believe there is a great psychic shadow over Africa, and it has much to do with our guilt and denial of our role in the slave trade. We too are blameworthy in what was essentially one of the most heinous crimes in human history.”

 

http://historynewsnetwork.org/article/41431

 

White slaves.

   http://en.wikipedia.org/wiki/Slavery_in_medieval_Europe

 

Fri, 01/30/2015 - 09:22 | 5724403 Ward cleaver
Ward cleaver's picture

Not interested in the truth. Oh but wait, we
need to have an honest talk about race. Lol

Fri, 01/30/2015 - 01:48 | 5723866 Double.Eagle.Gold
Double.Eagle.Gold's picture

you R fucking stupid.

Fri, 01/30/2015 - 07:32 | 5724161 Wahooo
Wahooo's picture

It's early. I don't get it.

Fri, 01/30/2015 - 08:29 | 5724253 Augustus
Augustus's picture

Evidence that the black slavers in Africa were capturing the stupid.

Fri, 01/30/2015 - 09:37 | 5724474 GMadScientist
GMadScientist's picture

I don't know about you. but I'm fundamentally opposed to white supremists.

You fuckers leave Diana Ross and the classics alone!

Fri, 01/30/2015 - 00:07 | 5723653 Skip
Skip's picture

The taxpayer has not been screwed but rather RAPED and the next step will see him MURDERED. That is just what the Group that is both the Banksters and the Bolsheviks do, they are the DESTROYERS! Just follow what they've done and it was all PLANNED not accidental or by chance.

Immigration, Outsourcing And Now Fast-Tracking TPP–When Will GOP Stand Up For Americans?
By Patrick J. Buchanan on January 29, 2015

And I don't need to remind ZH folks that outside of ZH and a few other outlets the TRUTH is carefully kept from the masses of taxpaying foundation stock Americans, and if any new readers are unfamiliar with this:

THE IRISH SAVANT On The Public’s Free Press Fantasy

Thilo Sarrazin on the Limits of Free Speech in Germany
"Most people want to observe the prevailing code of conduct but, being busy with jobs and families, they have no informed opinion of their own on most matters. So they think and believe what the media say they should think and believe."

Time To Rethink Martin Luther King Day By Peter Brimelow, former editor of Forbes magazine, on January 19, 2015

"This comes naturally, because the Politically Incorrect fact is that neither the Left`s black, Hispanic or Jewish components have any strong tradition of free speech. The question is whether they can cow the historic American nation into accepting its subjugation.
Diversity is not strength: it is weakness."

Fri, 01/30/2015 - 00:17 | 5723686 Solon the Destroyer
Solon the Destroyer's picture

Thank god your posts say "Skip".

...If only for the use of CAPS.

 

;o)

Fri, 01/30/2015 - 12:21 | 5725545 monad
monad's picture

kill

Fri, 01/30/2015 - 00:06 | 5723660 pragmatic hobo
pragmatic hobo's picture

when is that cunt face bernanke going to jail?

Fri, 01/30/2015 - 01:27 | 5723830 e_goldstein
e_goldstein's picture

Never, but that doesn't mean his head won't end up on a pike.

 

Fri, 01/30/2015 - 00:21 | 5723697 Spungo
Spungo's picture

"TARP proved that America was lost."

No, people defending TARP proved that America was lost. I've actually argued with people about this. My position is that a few banks failing would not be the end of banking in America since other banks would grow to fill the void. People strongly disagree with me. It's hopeless. People actually support the corruption.

Fri, 01/30/2015 - 00:33 | 5723712 Solon the Destroyer
Solon the Destroyer's picture

Any Sens or Cons with money in these three hedge funds?

Somebody should maybe look into that.

...They probably don't make campaign donations either.

Fri, 01/30/2015 - 00:48 | 5723752 Yen Cross
Yen Cross's picture

 General Motors, Solyndra... What's a few billion between cronies?

Fri, 01/30/2015 - 09:36 | 5724469 GMadScientist
GMadScientist's picture

About $10k/yr to you, me, and that empty lamppost.

Fri, 01/30/2015 - 01:01 | 5723778 Burls
Burls's picture

Timmmaaaaaaaaaaaaaay was right in the middle of TARP graft back when he was foaming the runway.

Fri, 01/30/2015 - 01:17 | 5723811 Bunga Bunga
Bunga Bunga's picture

“The discount came out of taxpayers’ pockets.”

 

In other words: crime that pays.

Fri, 01/30/2015 - 03:29 | 5723991 Soul Glow
Soul Glow's picture

Totally fucking bullish for the economy.

Fri, 01/30/2015 - 03:57 | 5724020 SMC
SMC's picture

Scum.

Fri, 01/30/2015 - 06:28 | 5724132 new game
new game's picture

hopeless-wait for the implosion, then seek revenge...

take em out when there is turmoil.

patience...

Fri, 01/30/2015 - 06:34 | 5724135 brucyy
brucyy's picture

In Soviet Amerika , Wall street occupies you

Fri, 01/30/2015 - 06:39 | 5724137 Batman11
Batman11's picture

Things are changing:

 

All Centrist, status quo parties are just so last year.

Current elites have failed miserably and taken massive rewards in the process.

It is time to look at that uninhabited political wilderness to the Right and Left with new parties.


Greece - Syriza

Italy - Five Star

Spain - Podemos

France - Le Pens far right

UK - UKIP

US - Tea Party


Elites, if you can't do the job, it is time to move out the way.

Unconditional bailouts for bankers and austerity for the people was never a vote winner.

Passing all the rewards to 1% of the population always was a democratic time-bomb.

The fuse is lit.


(Political Capitalism - the old, incompetent and inefficient must make way for the new.)

Fri, 01/30/2015 - 07:37 | 5724172 Last of the Mid...
Last of the Middle Class's picture

All government actons now are bread and circus, free shit for those who want to believe the government owes them something and circus which is nothing more than laws passed that quietly enrich the wealthy, often both at the same time. This is why there is no middle class. duh.

Fri, 01/30/2015 - 08:08 | 5724224 p00k1e
p00k1e's picture

Isn’t the Superbowl underwritten by the tax payer as well?  LOL   

Fri, 01/30/2015 - 07:59 | 5724211 p00k1e
p00k1e's picture

Oh, man.  Let’s point our fingers at the Welfare Rats of Ferguson.  

Fri, 01/30/2015 - 08:41 | 5724280 grapeape
grapeape's picture

Guillotine manufacturing. we already have that. there called log spliters. you can buy one at any farm store. they do the job a little slower but it still gets done.

Fri, 01/30/2015 - 09:33 | 5724461 GMadScientist
GMadScientist's picture

Thank you for shopping Ben and Janets's Garbage Buyback Emporium.

Do NOT follow this link or you will be banned from the site!