I used to think that I understood a great deal of the ins and outs of corporate America. However, I am stymied by the recent headlines of "Big Banks Roll Back the Tarp."
Apparently a few banking institutions such as Citigroup, Bank of America and Wells Fargo, along with seven others, have been given permission to pay back some 68 billion dollars to the government, which represents a portion of the bailout funds given to them last October and since to help divert a banking crisis in the United States.
Given permission to pay back funds borrowed from the government? What in the world could that sentence really mean? Think about your brother-in-law borrowing $500, and then asking permission to pay it back.
Or a secured or unsecured loan from the bank that you acquired and are awaiting their permission to pay it back. What’s wrong with this picture?
Upon further investigation the picture becomes somewhat clearer. The partial payback allows specific restrictions to be lifted that we imposed upon the banks at the time of the loans. The most severe of which was to limit executive compensation of the officers of the banks.
Surely, this item was included so as not to embarrass the government as the huge bonuses of AIG did several months ago. The banks insist that these restrictions are making it hard to keep their top performing executives. The thought occurs to me that if you ride around a merry-go-round you cover the same terrain each time you go around and the colorful horses still only go up and down. You figure it out, I certainly can’t.
No sports shorts this week as I am on my way to California to watch my oldest grandson, Danny, graduate from UC Irvine, a glorious feat I eagerly looked forward to for the past 21 years.
Have a great week.
P.S. I can’t go without taking a few leads as another inter-league play continues. This week I’ll take four under plays beginning with White Sox at Cincy, Houston at Minnesota, St. Louis at Kansas City and Arizona at Seattle.
The two over plays are Baltimore at Philly and Cleveland at Chicago.
Lean to the under’s as they’ve been the dominant play.
Question? Comment? E-mail me at: Sid Diamond