Obama does not want JPMorgan-Chase to return TARP funds

[RocketMan]

From an article at Politico, it appears Obama does not want JPMorgan-Chase to return the TARP money, despite the CEO saying they no longer need it. It makes one wonder what the President's real intent is for our banking system.  He struck a very threatening tone with the CEOs, claiming that his administration, “is the only thing between you and the pitchforks.”
Just how much control does he want government to exercise over banks?

The writer claims to have multiple sources for the information contained in the article.

Inside Obama's bank CEOs meeting

The bankers struggled to make themselves clear to the president of the United States.

Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees – and, by extension, to themselves.

“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.”

But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation, and offered a blunt reminder of the public’s reaction to such explanations. “Be careful how you make those statements, gentlemen. The public isn’t buying that.”

“My administration,” the president added, “is the only thing between you and the pitchforks.”

The various banks returning the TARP money as soon as possible would be a very good move, in my opinion.  It would send the right signals to the public that the banking system is in better shape, the CEOs are working diligently to fix the problems, and that government debt is being reduced.  But Obama would have none of that.  Why not?

JPMorgan’s Dimon spoke first. He began by complimenting the president on the economic team he’d assembled. And he said his industry needs to explain more directly to the American people that the economic recovery plans are already working. Dimon also insisted that he’d like to give the government’s TARP money back as soon as practical, and asked the president to “streamline” that process.

But Obama didn’t like that idea – arguing that the system still needs government capital.

The president offered an analogy: “this is like a patient who’s on antibiotics,” he said. “Maybe the patient starts feeling better after a couple of days, but you don’t stop taking the medicine until you’ve finished the bottle.” Returning the money too early, the president argued could send a bad signal.

Several CEOs disagreed, arguing instead that returning TARP money was their patriotic duty, that they didn’t need it anymore, and that publicity surrounding the return would send a positive signal of confidence to the markets.

Honestly, the President and his adminstration frighten me.  I cannot describe my thoughts about this in any other way.

The whole article is here:  http://www.politico.com/news/stories/0409/20871.html
It is an interesting read, and quite telling in my opinion.

[Gewehr98]

Pitchforks wielded by the public can be a very strong business motivator.

The White House doesn't need to play buffer in that respect.

Nor, do I believe, does JP Morgan-Chase actually have to give the returned funds to President Obama.

They're probably free to return the money ahead of schedule to the Treasury Department, not unlike what Lee Iacocca did all those years ago.

[buzz_knox]

The government wants control over the banks.  That's why Paulson forced the banks to take the funds last year.  Those who initially refused on the grounds that they didn't need it (i.e. Merril Lynch) were told that if they didn't take the money, Treasury would never return a phone call from them again (which is a lethal threat in our economic system).

[AZRedhawk44]

“My administration,” the president added, “is the only thing between you and the pitchforks.”

Ah, good old mob-driven Chicago politics at its finest.

Bankers:  In for a penny, in for a pound, gentlemen.  You sold for your 30 pieces of silver and the deed has already been done.  Giving it back doesn't put the train back on the tracks.  The precedent is there, and Obama et.al. intend to keep it in place permanently.

[buzz_knox]

You sold for your 30 pieces of silver and the deed has already been done.

With a gun to their head in more than a few cases.  I talked with one of Merril's lawyers after the deed was done.  He was still in shock at what Treasury threatened them with.

[AZRedhawk44]

With a gun to their head in more than a few cases.  I talked with one of Merril's lawyers after the deed was done.  He was still in shock at what Treasury threatened them with.

Care to share more?  What did Treasury threaten with?

I remember hearing about Bush bringing in all these bankers into the WH and not allowing them to leave unless/until they agreed to what he wanted.  Made me think of Nicholson's Joker character in Batman when he makes his mob takeover.

What was the hammer over everyone's head to stop them from saying "eff ewe, Mr. President.  Our company is our own and the government can attempt to collect rolling donuts while using only shafts to catch them."?

[longeyes]

What Willie Sutton would say today: Why rob banks when you can run them?

[Headless Thompson Gunner]

Just how much control does he want government to exercise over banks?

How much control does Obama want over the banks?  Complete control.  Just like with GM.

[lone_gunman]

Care to share more?  What did Treasury threaten with?

He could tell you, but then he would have to kill you.

[buzz_knox]

He could tell you, but then he would have to kill you.

I already did tell you, yet you both are alive.     It's not exactly a secret; the media got most of it correct, having pieced it together from various participants. 

The bank reps were assembled and Treasury (Paulson, not Bush) told them the amount each bank would receive from the TARP funds.  Some of the banks said thanks but not thanks, because they didn't need it (not to mention they didn't want to give the gov't an ownership interest).  Treasury explained that if any bank refused the funds, they'd be cut off.  Treasury wouldn't even return their calls.  Any future problems or issues and the banks would be completely on their own.  This is a lethal threat, as problems or issues requiring Treasury approval, input or waivers come up in the ordinary course of business all the time.  Treasury wasn't interested in buying toxic assets; it wanted the gov't to have a share in the companies.  So, you gave the gov't what it happened or your company took one in the neck.

The funny thing is that it took Merrill a while to figure out what to do with the money.  They had billions sitting there with not much worth investing in . . . except Treasury securities of course.