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Rep. Weiner: TARP banks already 'effectively nationalized'
Examiner ^ | 4/21/2009 | Eric Moskowitz

Posted on 04/22/2009 1:56:20 AM PDT by markomalley

Representative Anthony Weiner (D-Brooklyn) of New York's 9th congressional district, said banks that received funds from the Troubled Asset Relief Program (TARP) are already "effectively nationalized."

When asked at a question-and-answer session last night at NYU Law School about whether the Obama administration's contemplation of converting preferred shares of banks obtained as part of the bailout process into common stock would amount to nationalization, Weiner said it would.

Further, he reasoned, since the federal government currently exercises leverage over bank actions by dint of holding the option to convert preferred shares in banks to common stock (thereby technically gaining board representation,) banks subject to this leverage are nationalized right now.

Wiener said the Obama administration's hesitance to actually convert the preferred shares to common stock was probably due to the possibility such a move would more urgently motivate banks having taken TARP funds to repay them faster to remove the possibility of a government presence on their boards.

Weiner's comments come as the banking giant Goldman Sachs announced Monday that it is ready and eager to repay the $10 billion in TARP funding it received this past winter. According to the Wall Street Journal, as of March 27 Goldman netted income of $1.81 billion ($3.39 per share), up from $1.51 billion ($3.23 per share) a year ago.  J.P. Morgan Chase & Co. has said it too wants to repay it's TARP loan.

The Journal reported that other banks have expressed interest in repaying taxpayer money quickly in order to get out from under government regulations they claim are onerous and subject to unpredictable changes.

Representative Anthony Weiner, D-Brooklyn
Weiner said TARP banks are "effectively nationalized" because, by having the option to convert accumulated preferred shares in banks into common stock, the federal government implicitly holds the power to grant itself board representation

Weiner said the federal government faces a conundrum: it wants the taxpayer funds repaid, but it doesn't want to relinquish control of banks if it thinks doing so will further destabilize the financial system on the whole. National Economic Council chairman Lawrence Summers voiced similar concerns on Sunday's "Meet The Press" television program.

Not running - yet; says Mayor Mike "lied"

Though Weiner reiterated his stance that he isn't presently planning on running for mayor of New York City, he said he will definitively announce in "the last week of May" whether he will run. He said that because of the financial situation, right now he wants to focus on representing New York City's interests in Washington, D.C.

Such ambiguity didn't stop Weiner from making the case for his still-theoretical candidacy. He said New York City Mayor Michael Bloomberg "lied" when the mayor claimed that the process to examine and revise the term limits law would be "democratic."

"And I don't like being lied to," he warned, predicting the mayor's successful effort to enable himself to run for a third term would be remembered as a "dark day" for New York City. He said he would push for New Yorkers to have a say in how the law is restructured.

On the question of MTA financing, Weiner said his challenge to the present funding plan isn't regarding the amount of money allotted, just with how it will be used. Weiner wants state and local operating budgets to be eligible for federal infrastructure funding. Currently, federal law allows federal infrastructure funds dedicated to states and localities to fund only to specific construction projects, not annual operating budgets.

Weiner claimed that because New York City's subway system is unique in the nation in that it is "mature, except for construction on the Second Avenue line and the 7-train," the system should be eligible for federal funding because it is vital to the New York economy even though maintenance and operation, not building, comprise the vast majority of it's budget.

In response to an audience question about whether Democrats will move to implement gun control legislation, Rep. Weiner was not optimistic, predicting that the Obama administration would have to expend enormous political capital in such an undertaking, and that the votes in Congress were not available. He surmised that Congressional Republicans would uniformly reject any such proposal and would be joined in opposition by too many Democrats for a bill to pass.

Tony, the ladies' man

Rep. Weiner discussed lighter issues as well. When asked whether there was truth to the apparent perception that he is a "ladies' man," he claimed he wasn't sure, that he has a "network of 160,000 Jewish grandmothers" at his disposal (implying that he'd have no problem finding a date if he wanted one), but that he is, in fact, seeing someone. Weiner is dating Huma Abedin, an aide to Secretary of State Hillary Clinton during Clinton's 2008 push for the democratic presidential primary nomination.

When asked whether his name has been a source of confusion or a hinderance in his political career - "Anthony" being a commonly Catholic name, "Weiner" a commonly Jewish one - the congressman said that it has actually helped him.

He described how, in one of his early campaigns, he saw signs in mostly Latino Ozone Park, Queens exclaiming "TONY!" Assuming he had an as-yet-unheard-of opponent with local support, he asked his aides who "Tony" was. His aides informed him that they themselves had the signs made, and that Wiener was, in fact, "Tony."

He then cracked that in Borough Park, which is heavily Orthodox Jewish, "They still know me as Chaim Ben-Dovid Mordechai." 



TOPICS: Business/Economy; Front Page News; Government; US: New York
KEYWORDS: anthonyweiner; fascism; humaabedin; mayor; nationalization; newyork; nyc; nycity; nycmayor; obamaregime; tarp; weiner
Weiner said TARP banks are "effectively nationalized" because, by having the option to convert accumulated preferred shares in banks into common stock, the federal government implicitly holds the power to grant itself board representation

Unusual to see such candor. I wonder how he is going to be punished by the DNC leadership...

1 posted on 04/22/2009 1:56:20 AM PDT by markomalley
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To: markomalley

Two questions: Where did all the money go? Why are there not a whole lot of people in jail?


2 posted on 04/22/2009 2:07:30 AM PDT by David Isaac
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To: markomalley

“the possibility such a move would more urgently motivate banks having taken TARP funds to repay them faster”

that’s bull. banks were threatened into taking the money. they would no doubt be threatened into not repaying also.


3 posted on 04/22/2009 2:11:39 AM PDT by chuck_the_tv_out (click my name)
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To: chuck_the_tv_out

“that’s bull. banks were threatened into taking the money. they would no doubt be threatened into not repaying also.”

They are being threatened by their new boss.


4 posted on 04/22/2009 2:31:06 AM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: markomalley

For all the talk about an IMPERIAL presidency during Bush’s tenure, you ain’t seen nothing yet.

The Obama nexus (which has the combined business experience of 0 years), has managed to impose imperial control over banks, auto companies, insurance companies, etc.


5 posted on 04/22/2009 2:38:45 AM PDT by plangent
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To: markomalley
THIS is what some folks on here think that my Congressman, Gresham Barrett (Rino), SC deserves a pass for voting for.
(In Limbaugh's "New Castrati voice) "B-b-but ith juth ONE mithtake...."

Yeah, I know that I am beating a dead horse. But I am not totally convinced that the horse is dead, so I will keep beating it until it's rotten, stinking carcass has been removed not only from the halls of the United States Congress, but from American (and South Carolina) politics forever.

6 posted on 04/22/2009 2:42:12 AM PDT by PalmettoMason ("an empty limousine pulled up in front of the White House, and Barack Obama got out")
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To: markomalley
Further, he reasoned, since the federal government currently exercises leverage over bank actions by dint of holding the option to convert preferred shares in banks to common stock (thereby technically gaining board representation,) banks subject to this leverage are nationalized right now.

Congressman Weiner should read section 6 of the sales purchase agreement for the preferred shares:

Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.

I have checked both the Edgar filings for Bank of America and for Wells Fargo, and the language is identical. The terms of the preferred sale are clear: these shares are not convertible to any other type of security, including common.

Nor is there is an attached put option; the only way that these perpetual instruments can be turned into cash is at the option of Bank of America or Wells Fargo via the redemption features of the agreement. There is no provision in the agreement for the government to force these shares to be redeemed.

Links for these Edgar filings for Bank of America; the relevant document is http://idea.sec.gov/Archives/edgar/data/70858/000119312508220360/dex31.htm; the entire filing for this transaction can be found at http://idea.sec.gov/Archives/edgar/data/70858/000119312508220360/0001193125-08-220360-index.idea.htm.

Links for these Edgar filings for Wells Fargo; the relevant document is http://idea.sec.gov/Archives/edgar/data/72971/000095012308013950/y72262exv4w1.htm; the entire filing for this transaction can be found at http://idea.sec.gov/Archives/edgar/data/72971/000095012308013950/0000950123-08-013950-index.idea.htm.

There is a related issue; as a part of this transaction, both companies also sold a warrant to directly purchase common stock from each company. However, the exercise price is $30.79 per share for Bank of America shares and BAC is currently around $8-$9 per share, so it would make no economic sense for the government to buy shares from Bank of America at $30.79 per share. The exercise price is $34.01 per share in the Wells Fargo warrant, and WFC is currently around $18-$19 per share, and again, it would make little economic sense for the government to exercise this warrant.

Such purchases of common under these warrants would put a relatively small of amount of capital into the companies --- full exercise of the warrants by the government would bring each bank around $3 billion, much less than the $25 billion raised by the sale of the preferred.

7 posted on 04/22/2009 2:58:14 AM PDT by snowsislander (NRA -- join today! 1-877-NRA-2000)
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To: plangent

Yep. Previous administrations set the table, now this one is shoving it down our throats.


8 posted on 04/22/2009 3:49:28 AM PDT by ovrtaxt (We are not to expect to be translated from despotism to liberty in a feather bed. -Jefferson)
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To: markomalley

Saw a very interesting take as to why Tiny Tim is refusing the pay back of TARP monies from some banks that want to be free of it. Banks that could pay back the money would expose the weaker banks that could not and that these banks would go under. So in essence what they are trying to prevent is exactly what would have happened if they had done nothing and saved the taxpayer billions. Brilliant.


9 posted on 04/22/2009 4:07:56 AM PDT by RU88 (The false messiah can not change water into wine any more than he can get unity from diversity.)
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To: markomalley

Thank you George W. Bush for Nationalizing our banks! I guess that’s “compassionate conservatism” in action!


10 posted on 04/22/2009 4:10:08 AM PDT by Boiling Pots (The Politicians think we're all stupid, and they're largely correct.)
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To: driftdiver

Call the bluff. Get the feds to convert to common stock, then file Chapter 11.......


11 posted on 04/22/2009 4:18:51 AM PDT by Kozak (USA 7/4/1776 to 1/20/2009 Requiescat In Pace)
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To: David Isaac
Two questions: Where did all the money go? Why are there not a whole lot of people in jail?

Could be they are mostly dems.

12 posted on 04/22/2009 5:44:02 AM PDT by dearolddad
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To: markomalley

I heard yesterday that the Fed.gov is once again promoting SubPrime Crime! No money down, no credit check, interest-only loans for the first 10 years to minorities, etc. Anyone able to confirm this?


13 posted on 04/22/2009 5:45:09 AM PDT by 2harddrive (...House a TOTAL Loss.....)
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To: Boiling Pots
Thank you George W. Bush for Nationalizing our banks! I guess that’s “compassionate conservatism” in action!

I thought the original TARP was passed so that the "troubled assets" could be "relieved". The original TARP never invisioned ownership of bank stocks. Only under Obama did the government start owning banks. Is my memory failing?

14 posted on 04/22/2009 6:03:33 AM PDT by Go Gordon
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To: 2harddrive
I heard yesterday that the Fed.gov is once again promoting SubPrime Crime! No money down, no credit check, interest-only loans for the first 10 years to minorities, etc. Anyone able to confirm this?

It's worse than that. You can borrow up to 105% of the value of the home.

15 posted on 04/22/2009 6:05:00 AM PDT by Go Gordon
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To: David Isaac
Where did all the money go?

To plug holes in their balance sheets.

16 posted on 04/22/2009 7:14:03 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: snowsislander
Congressman Weiner should read section 6 of the sales purchase agreement for the preferred shares:

Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.

I have checked both the Edgar filings for Bank of America and for Wells Fargo, and the language is identical. The terms of the preferred sale are clear: these shares are not convertible to any other type of security, including common.

Excellent find. Thanks.

17 posted on 04/22/2009 7:16:17 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: AdmSmith; Berosus; Convert from ECUSA; dervish; Ernest_at_the_Beach; Fred Nerks; george76; ...
The Obamanation will get damage control out on this pretty quickly, I'd expect the first FR topic to pop up any minute.
banking giant Goldman Sachs announced Monday that it is ready and eager to repay the $10 billion in TARP funding it received this past winter... J.P. Morgan Chase & Co. has said it too wants to repay it's TARP loan. The Journal reported that other banks have expressed interest in repaying taxpayer money quickly in order to get out from under government regulations they claim are onerous and subject to unpredictable changes... Weiner said the federal government faces a conundrum: it wants the taxpayer funds repaid, but it doesn't want to relinquish control of banks...

18 posted on 04/22/2009 2:39:46 PM PDT by SunkenCiv (https://secure.freerepublic.com/donate/____________________ Profile updated Monday, January 12, 2009)
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Weiner is dating Huma Abedin, an aide to Secretary of State Hillary Clinton during Clinton's 2008 push for the democratic presidential primary nomination.

19 posted on 04/22/2009 2:42:18 PM PDT by SunkenCiv (https://secure.freerepublic.com/donate/____________________ Profile updated Monday, January 12, 2009)
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To: SunkenCiv

Hmmm, and we all thought that Huma didn’t much go for weiners?


20 posted on 04/22/2009 2:43:17 PM PDT by Revolting cat! (Let us prey!)
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To: markomalley

We’re on the road to fascism.


21 posted on 04/22/2009 4:55:01 PM PDT by Cacique (quos Deus vult perdere, prius dementat ( Islamia Delenda Est ))
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To: Go Gordon

Has TARP been amended? I think not.

TARP is Bush’s baby. It’s 100% his.


22 posted on 04/22/2009 7:12:15 PM PDT by Boiling Pots (The Politicians think we're all stupid, and they're largely correct.)
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To: Boiling Pots
Has TARP been amended? I think not. TARP is Bush’s baby. It’s 100% his.

Actually, it has. The original intent was to buy toxic assets. When they realized that it would take trillions to do that, the Treasury Secretary, given sole authority BY THE CONGRESS to spend as he saw fit, changed from buying toxic assets to buying stock in banks. When they got up to $350 Billion of the $700+ Billion spent, and after Obama won the election, the democrtas in congress and the mouthpieces for Obama, begged Bush not to spend anymore because Obama should have the right to spend it how he saw fit.

Bush stopped at $350 Billion. He can be blamed for $350, but that's it. All the other trillions were spent under Obama. Hence, it's Obama's baby. Unfortunately, as a result of his stupidity it's going to be our children's, grandchildren's and great grandchildren's albatross.

23 posted on 04/22/2009 9:56:22 PM PDT by Go Gordon
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To: Toddsterpatriot
Excellent find. Thanks.

You are most welcome.

You might also be interested in the following: I noticed at a Wordpress blog a reference to a repository of these agreements in the form of (largish) pdfs: http://financialstability.gov/docs/agreements/. (To give credit where it is due, that link comes from this Wordpress blog site.)

24 posted on 04/23/2009 9:34:34 AM PDT by snowsislander (NRA -- join today! 1-877-NRA-2000)
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