Obama's Pay Czar cost U.S. taxpayers TENS of BILLIONS in TARP profit

[Swing low, sweet chariot. Comin' for to carry me home.]

If Obama hadn't attempted to regulate pay, then the banks would have held onto the TARP a lot longer and U.S. taxpayers' profits would have been around 50-100 billion.  Example:  Citigroup...its efforts to get out from under the pay czar meant that they did a equity offerring much earlier than necessary and drove the stock price (a stock U.S. taxpayers are significantly invested in) down from ~$5.00 to ~$3.20 and wiping out tens of billions of U.S. taxpayer unrealized profit.

I am not against regulation, in general, but regulating the upper limit of pay is really counterproductive, as Obama has just proven.  

P.S. - I think Citi's stock is an excellent buy at these levels.  It will surely go to $6/share in the next 18 months...IMO  (Disclosure:  I own 6k shares of Citi at $4.96 basis)

[opebo]

How does this matter?  If they wipe out 50-100 billion by 'bad decisions' they can just print it.  The net result is no change.

It just gets kind of funny taking about the State 'making a profit'.

[jokerman]

Yeah I don't understand the problem either...the #1 objective is to rescucitate these banks and the economy.  The taxpayers can tax what they need later; a buck is a buck.  If the government had held on to the corporations longer hack jmfcst would be complaining about TARP crowding out capital investors.

[Swing low, sweet chariot. Comin' for to carry me home.]

Yeah I don't understand the problem either...the #1 objective is to rescucitate these banks and the economy.  The taxpayers can tax what they need later; a buck is a buck.  If the government had held on to the corporations longer hack jmfcst would be complaining about TARP crowding out capital investors.

what?  do you have any idea how TARP was handed out in Citi's case?  The government is STILL holding billions of Citi stock at $3.25/share basis, which it should have sold when Citi was near $5/share and made the U.S. taxpayers a handsome profit.  Instead, the government held onto the stock and then attempted to limit the pay of Citi employees, which caused Citi then to turn around and sell stock to pay back the TARP money, which diluted the shares the government owned in Citi....now the government is UNDER WATER on the Citi deal.

Obama made 2 HUGE mistakes:  1) attempting to limit private sector pay, and 2) letting a HUGE profit turn into a loss.  Instead, Obama should have sold Citi shares while they were north of $4 and made a huge profit; for after all, it's not his money, it's the people's money.

That's the problem with limiting private sector pay - the private sector still has options available to allow itself to get around those restrictions and the loser ends up being the U.S. Treasury and the American public.

[opebo]

But isn't limiting pay a desirable goal even if it costs money overall?

[jokerman]

Yeah I don't understand the problem either...the #1 objective is to rescucitate these banks and the economy.  The taxpayers can tax what they need later; a buck is a buck.  If the government had held on to the corporations longer hack jmfcst would be complaining about TARP crowding out capital investors.

what?  do you have any idea how TARP was handed out in Citi's case?  The government is STILL holding billions of Citi stock at $3.25/share basis, which it should have sold when Citi was near $5/share and made the U.S. taxpayers a handsome profit.  Instead, the government held onto the stock and then attempted to limit the pay of Citi employees, which caused Citi then to turn around and sell stock to pay back the TARP money, which diluted the shares the government owned in Citi....now the government is UNDER WATER on the Citi deal.

Of course then we could have had a mass of private investors to "bail out" anew, right?  Not literally, of course, but my point is that there's no such thing as a free lunch.  I don't see how its a material issue at all whether the government made a profit in this particular circumstance; the objective of government is to promote general welfare, not make a profit.  That would just be the people collectively robbing themselves.

[Swing low, sweet chariot. Comin' for to carry me home.]

Of course then we could have had a mass of private investors to "bail out" anew, right?  Not literally, of course, but my point is that there's no such thing as a free lunch.    I don't see how its a material issue at all whether the government made a profit in this particular circumstance; the objective of government is to promote general welfare, not make a profit.  That would just be the people collectively robbing themselves.

wow, so much to explain....

first, the responsiblity of the government is to taxpayer, not the investor, especially when it is using taxpayer money.

second, the investor make the individual choice to buy the stock or not

third, the government was sitting on a huge profit and was urged repeatedly to sell, for the sake of the taxpayer as well as for the sake of the investor (the overhang of those government shares is weighing on Citi's stock)

fourth, TARP was about stabilizing the banks, and in that regard it was a huge success and therefore the government would have sold

fifth, the purpose of TARP was NOT meant for the government to play the stock market.  The TARP met its purpose and the government was sitting on HUGE gains and was asked repeatedly by the investor community to sell...the government refusef and now the taxpayer has a losing hand while the investors still have to deal with the overhang of the outstanding government shares.

[jokerman]

Playing the stocket market is precisely what you're proposing, jmfcst, with all of your concerns about profits.  You admit TARP suceeded in stabilizing the banks, but it also had a secondary goal to achieve, that is laying the foundation for a new financial system that would avoid the problems that required the need of TARP in the first place.

[Swing low, sweet chariot. Comin' for to carry me home.]

Playing the stocket market is precisely what you're proposing, jmfcst, with all of your concerns about profits.

how I am advocating playing the market when I am saying the government should have sold Citi's stock as soon as the TARP had reached it's goal?  Instead, the government held the stock longer than necessary and let it ride.  The result was the government turned a HUGE gain into a loss.

[opebo]

Playing the stocket market is precisely what you're proposing, jmfcst, with all of your concerns about profits. 

And it is absurd for the State to play the market - the market is a creature of the State.  Nothing that the market can 'do' - such as realize a lot of dollars from nowhere and nothing - is beyond the purview of the State to do by merely ordering it.

[Swing low, sweet chariot. Comin' for to carry me home.]

If Obama hadn't attempted to regulate pay, then the banks would have held onto the TARP a lot longer and U.S. taxpayers' profits would have been around 50-100 billion.  Example:  Citigroup...its efforts to get out from under the pay czar meant that they did a equity offerring much earlier than necessary and drove the stock price (a stock U.S. taxpayers are significantly invested in) down from ~$5.00 to ~$3.20 and wiping out tens of billions of U.S. taxpayer unrealized profit.

I am not against regulation, in general, but regulating the upper limit of pay is really counterproductive, as Obama has just proven. 

P.S. - I think Citi's stock is an excellent buy at these levels.  It will surely go to $6/share in the next 18 months...IMO  (Disclosure:  I own 6k shares of Citi at $4.96 basis)

Citi is up 3% from the yesterday's close at $3.20.  If you get in now, your risk is extremely low for yesterday's was the bottom!!!   Look for Citi to double within 18 months.