The Corner

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Citi Out From Under the TARP


How comical is Ken Feinberg, the Obama administration’s “special master” for compensation? In announcing new executive-pay restrictions just as the last of the major money-center banks pays back its TARP funds, he resembles a cop raiding a speakeasy as the last of the big bootleggers sneaks out the back (just in time for bonus season!) and slapping cuffs on the one or two hapless drunkards still left at the tables.

As for Citi’s decision to exit TARP, I have nothing substantial to add to what I wrote a week and a half ago when Bank of America did the same. These banks have repaid TARP, but they continue to enjoy large implicit subsidies thanks to the perception that the government would bail them out again if another crisis hit. They remain vulnerable to a double-dip recession, as loan defaults are not getting any better. Obama has called the heads of the banks to a meeting at the White House today to lecture them about lending more to small businesses, but they seem more interested in helping Washington borrow more, offering to underwrite more “Build America” bonds to finance Obama’s new stimulus. And that’s among the ones who bothered to show up; a number of CEOs couldn’t make it, due to inclement weather.

Your headline for today: Fog prevents collaboration in smokescreen.