TARP Meant to ‘Darwin Synthesize the Weaker Banks’

TARP was never intended to free up credit. On September 18, 2008, the US Congress emerged from a special meeting with President Bush and Treasury Secretary Henry Paulson claiming the government needed the funds and power to buy distressed assets.

Since then, information has been leaking out that is in direct conflict with this information. According to an interview on CSPAN with Representative Paul Kanjorski of Pennsylvania, “Things were done that were misunderstood. We did not give the $700 billion for the purpose of lending money. That was never in the program.” (one minute into the above video) On Wednesday, February 11th, David Zublick and Sherri Reese of America Talks Radio noticed the discrepancy between Kanjorski’s statements and the language used by Congress and the Bush Administration on the reasoning behind the Emergency Economic Stabilization Act, commonly referred to as the Bailout Bill. Zublick and Reese went on to point out that in late September and early October of 2008, the Bush Administration and leaders in Congress claimed the Bailout Bill was needed so that companies could purchase needed inventory and make payroll needs. Another source has now come forth to confirm Kanjorski’s statements. Richard K. Davis, U.S. Bancorp Chief Executive, spoke to hundreds of business people at the Thrivent Financial for Lutherans' Business Leaders Forum on Tuesday, February 17, in Minneapolis, MN. TwinCities.com reported:

Davis went on to say in his talk that while government officials marketed the program as a way to entice banks to lend again, TARP actually was designed to give solid banks like U.S. Bancorp some extra cash to buy weaker banks in the system. U.S. Bancorp did just that late last year when it acquired the assets of two failed banks in California, Downey Savings and Loan and PFF Bank & Trust.

"We were told to take it so that we could help Darwin synthesize the weaker banks and acquire those and put them under different leadership," he said. "We are not even allowed to mention that. ... We were supposed to say the TARP money was used for lending."

(snip)

"Now they're punishing you for having the capital," he said, adding that he refuses to stand by and let his company become "collateral damage" in an attempt to nationalize the banks.