Bank of America CEO Ken Lewis now says that taking $20 billion from the federal government to support BoA’s acquisition of Merrill Lynch was a “tactical mistake.” Lewis says he expects BoA to repay the $45 billion it owes the government over the next two to three years.
Twin Cities-based TCF doesn’t intend to wait that long. Chief executive Bill Cooper, a long-time conservative activist, has petitioned to give back the $361 million in TARP money that the bank received in November. Cooper says the feds have changed the terms of the deal:
“I don’t want to be part of the new regulatory regime that’s growing up around TARP,” Cooper said in an interview. “Congress is now talking about putting their oar in the water on just about everything we do. That puts us at a competitive disadvantage.”
Other banks may follow suit, including some who say they were strong-armed into accepting TARP money by the government.
Meanwhile, those who have to put their money where their mouth is are turning thumbs down on the “new regulatory regime” and other aspects of Obamanomics. The Dow plummeted another 4.2 percent today, the NASDAQ 4 percent. Every time you think the market can’t possibly fall any lower, it does. Voters may not yet have a clear idea of what left-wing zealotry can do to an economy, but investors do, and they are voting with their wallets.
What we need to do here, I think, is separate the disease from the “cure.” The disease was the original financial crisis that was precipitated by a decline in real estate prices. That in turn exposed weakness in derivative financial instruments that contaminated banks’ balance sheets and caused a crisis of liquidity and, in some cases, solvency.
That was a bad series of economic problems, but they have been known for a while now. Those original problems–the disease–don’t explain the current meltdown. The crisis we are now seeing in the markets, and, I think, a good portion of the worsening employment picture and general economic slowdown, is due to the “cure”–the various measures the Obama administration has proposed or enacted, ostensibly to deal with the economic downturn but in fact to permanently reorder our nation’s economy.
When investors and employers see higher taxes; vastly increased federal spending, much of it grotesquely wasteful; unprecedented deficits for the foreseeable future; a prospective tax on energy that will make all American products more expensive and less competitive on the world market, while depressing Americans’ buying power; proposed bank nationalizations; burgeoning federal regulations; and a massive transfer of wealth and power from the private sector to the political class–how would you expect them to respond? By investing in American companies, planning to expand production facilities and hiring more workers?
The markets are of course imperfect, but they offer a rough means of distinguishing between the disease and the cure. Obama isn’t responsible for what happened before he got elected (except, of course, to the extent that he bears responsibility as a Senator). But the Dow stood at 9,625 on Election Day. I don’t see how what has happened since then can be seen as anything but a vote of no confidence in Obamanomics, both as projected during the campaign and as implemented since Obama’s inauguration.
UPDATE: Glenn Reynolds has more on the same theme, including this chart showing the Dow’s decline since the Democrats’ pork bill passed; click to enlarge:
It’s way too early to tell, of course, but at the rate he’s going, “Barack Obama” may be a name the Republicans can run against for a generation, like “Herbert Hoover.” Only this time, with real cause.
FURTHER UPDATE: Two comments from Facebook.
J.C. Bowman: “Contemplating a doubled deficit and the lowest Dow since 1997? Where did President Obama get his economics degree? Just asking.”
Tim McGuire: “Obama is to capitalism as Kevorkian was to health care.”
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