The Federal Government is not Giving Money Away

[Rand_Rover]

@Kimstu

And while we’re nitpicking minor linguistic inaccuracies, I’d like to remind everybody not to use “whom” when what you mean is “who”, as in “Whom are you, anyway?” or “He’s the one whom I thought was being silly.” It’s okay to use “who” for “whom” (as in “I don’t know who to ask”), but not the other way around. Thank you for your cooperation.

So that was pretty nice of the bank to give you all that money to buy a house, right?

A gift is fundamentally different than a loan or purchase price for assets. I’m not quibbling about a minor linguistic difference.

[Rand_Rover]

@spooje

Aren’t they buying assets that have basically lost most of their value (bad loans)?

(I really don’t know. There’s a lot of this stuff I don’t understand)

Well, first, I think that the TARP program hasn’t yet been used to purchase actual loans, but there are plans to do so. Second, there’s a really good thread somewhere around here started by Scylla where he explains the different concepts of “value” for a loan. If you can appreciate the differences between these different concepts, then it is entirely possible that the government buys loans that have lost a lot of their value and then makes a profit on the deal by collecting the payments until maturity.

[Rand_Rover]

@gonzomax

Some of the banks got cash infusions. That is self explanatory.
The auto companies are getting loans.
Bernanke said yesterday that the money is sitting in banks unloaned. That of course is contrary to the reason they got the money in the first place.

Your first sentence is simply factually incorrect. The “cash infusions” you speak of did not entail free money given from the federal government to the banks. The government bought preferred stock from the banks.

[Captain_Carrot]

@Frank

Not yet. I’ve only been getting the ones that urge me to register for the 2008 stimulus refund at the “IRS sErvice weebsite”.

Not emails, ads. Most of them on this site.

[Richard_Parker]

The money has, of course, been “given.” It has been given in exchange for various assets and instruments. That isn’t an improper use of the word “given.”

If you’ve examples of people referring to it as a “gift,” that would be a different matter. You would be right to argue that it is not a gift. Are there any examples of that?

[elucidator]

A quibble. A minor point, but that’s the trouble with quibbles. It is not at all uncommon to refer to an arrangement which favors one participant so much more than the other, it is referred to as a “gift”. In this case, it appears to be the gift of life.

[BrightNShiny]

Here’s Wiki on TARP

In a report dated February 6, 2009, the Congressional Oversight Panel concluded that the Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value. The COP found the Treasury paid $254 billion, for which it received assets worth approximately $176 billion, for a shortfall of $78 billion. The COP’s valuation analysis assumed that “securities similar to those issued under the TARP were trading in the capital markets at fair values” and employed multiple approaches in order to cross-check and validate the results. The value was estimated for each security as of the time immediately following the announcement by Treasury of its purchase. For example, the COP found that the Treasury bought $25 billion of assets from Citigroup on 10/14/08, however, the actual value was estimated to be $15.5, creating a 38% (or $9.5 billion) subsidy.

Before I wade into this, perhaps someone here can offer clarification on what “assets” the COP report is referring to? Is it referring to equity warrants and the like?

[Rigamarole]

Uncle Sam doesn’t care about paying his debts, why should the people he lends to? Are there really any consequences?

[Rand_Rover]

@Richard_Parker

The money has, of course, been “given.” It has been given in exchange for various assets and instruments. That isn’t an improper use of the word “given.”

I agree. But why say “given” when “loaned” is much more complete? I also think that many of the people on this very board who say “given” really do think that the federal government wrote a check and got nothing in return (see Gonzomax above) and lots of others in GD.

Also, for those of you saying I’m “just” arguing semantics, the ultimate effect here I think is that people begin thinking that one of the jobs of the government is just to spread money around like pixie dust whenever it thinks it may help, which legitimizes the practice. Of course, the nearly $1 trillion stimulus bill that does include many actual handouts isn’t going to improve things in this regard either.

[Duke]

@Rand_Rover

Also, for those of you saying I’m “just” arguing semantics, the ultimate effect here I think is that people begin thinking that one of the jobs of the government is just to spread money around like pixie dust whenever it thinks it may help, which legitimizes the practice.

So thinking that something happens “legitimizes” it? I’m sure you’ve thought that the government has been “spreading money around like pixie dust” for decades with handouts and welfare and whatnot…has that “legitimized” it for you?

[Richard_Parker]

@Rand_Rover

I agree. But why say “given” when “loaned” is much more complete?

Has it been loaned? A loan is money given with the expectation of return payment usually secured by some other asset. In this case, we simply bought assets, which may or may not be very valuable. If I buy your shitty toaster at a garage sale because I feel bad that you can’t feed your kids, we wouldn’t call that a loan. If we had to choose a single word, it is hard to come up with something accurate. A subsidy? So I think “given” is appropriate when understood as one end of a helper-helpee exchange.

FWIW, I think you’re right that the language is important.

[Liberal]

@foolsguinea

Whom do you think you are to tell WE how to misuse pronouns?

That should be “Who do you think you are…”.

Thee popinjay!

That should be “Thou popinjay!”.

[villa]

@Rand_Rover

Your first sentence is simply factually incorrect. The “cash infusions” you speak of did not entail free money given from the federal government to the banks. The government bought preferred stock from the banks.

And if the cash infusion is on more preferable terms than would be available to the bank otherwise, then the difference between the cost of the money to the bank from the government and the cost of the money if obtained through private capital markets represents a gift.

The whole shebang isn’t a gift, but there is a gift element to it.

[Really_Not_All_That_Bright]

@villa

And if the cash infusion is on more preferable terms than would be available to the bank otherwise, then the difference between the cost of the money to the bank from the government and the cost of the money if obtained through private capital markets represents a gift.

The whole shebang isn’t a gift, but there is a gift element to it.

Psst… see post #4

[kidchameleon]

@elucidator

Its probably the lefty media again, which has poisoned our minds with the silly notion that government, especially Republican government, favors the wealthy and powerful over the rest of us.

I can’t believe Pelosi got the GOP nomination last election.

[gonzomax]

@Rand_Rover

Your first sentence is simply factually incorrect. The “cash infusions” you speak of did not entail free money given from the federal government to the banks. The government bought preferred stock from the banks.

http://southernbancorp.com/2009/01/20/southern-bancorp-gets-cash-infusion-11-million-is-part-of-us-relief-plan/ Just not true. This is one of many banks that got cash infusions. Last time you made that claim I went through the program and found several incidents of cash infusions.

[zut]

Do you actually read the articles you cite, or do you just assume the headline means whatever you want it to mean?

[kidchameleon]

@gonzomax

http://southernbancorp.com/2009/01/20/southern-bancorp-gets-cash-infusion-11-million-is-part-of-us-relief-plan/ Just not true. This is one of many banks that got cash infusions. Last time you made that claim I went through the program and found several incidents of cash infusions.

That is what the bank titles their article, but if you read your cite:

@southernbancorp

The Treasury Department buys preferred shares in participating banks, money from which they in turn can use for a variety of purposes, including making loans or buying banks

@southernbancorp

It wasn’t a difficult decision, Baldwin said, because the Treasury Department already is a stockholder in Southern Bancorp

Do you have any actual proof to back up your claim?

[villa]

@Really_Not_All_That_Bright

Psst… see post #4

I saw it. Just sometimes things need to be repeated multiple times to get through to some particularly bone headed individuals…

[gonzomax]

KeyCorp, Capital One to receive cash infusion: source | Reuters Cash infusions.
Of course Chrysler paid back the government for loans. Does anyone think the banks will? The auto companies are getting loans. Thay are making concessions in salaries and wages. I would like to see the arrogant jerks who looted the system pay with fraud charges. But for some reason ,many think they will suddenly become responsible citizens now.