Actually, there were banks that tried to refuse the money right from the beginning, but were told if they didn't take it, they would be subject to FDIC audits.
Judge Andrew Napolitano: Government forcing banks to take bailout money
By Wing Chun Geologist on April 5, 2009 at 04:12 pm 1 Comment
EXTORTION, that's the word Judge Andrew Napolitano is using to describe the Obama Administrations tactics when it comes to banks that don't want taxpayer money. The superior court judge and legal pundit has reported that the Treasury Department and FDIC are forcing banks to take TARP funds, even if they don’t want the money.
The Federal government committed extortion and they’re not being held accountable. What’s next? Listen to this: I recently met with the Chair and CEO of one of the country’s top 10 bank holding companies. His bank is worth in excess of $250 billion, has no bad debt, no credit default swaps, no liquidity problems, and no subprime loans. He told me that he and others were forced by Treasury and FDIC threats to take TARP funds, even though he did not want or need them.
Basically the administration forced healthy banks to take TARP money at swordpoint. The sword in question was the threat of expensive public audits.
The FDIC — with Treasury backing — threatened to conduct public audits of his bank unless his board created and issued a class of stock for the Feds to buy. The audit, which he is confident his bank would survive, would cost it millions in employee time, bad press, and consequent lost business.
He pleaded with the Feds to leave his successful bank alone. He begged his board to let him tell the Feds to take a hike. But they gave in. The Feds are now just a tiny shareholder, but want to begin asserting more and more control. This is a classic extortion: Controlling someone’s free will by threatening to perform a lawful act. (Blackmail is the threat is to perform an unlawful act in order to control someone else’s free will.) There are no exceptions in the statutes prohibiting extortion for government persons
This happened in September 2008, but the demands for more control are more recent. It sounds to me like Paulson, Geithner, Bernanke, and Sheila Blair have all read a biography of Benito Mussolini. I guess they skipped the last chapter.
There is simply no authority in the U.S. Constitution for Congress to exercise the level of control it now seeks over private industry. In fact, this level of control will wind up costing the businesses that took TARP (voluntarily or involuntarily) money since they will lose key employees who will go to work elsewhere and because the reporting requirements will take time and time is money. The Constitution basically says that if the government wants to take time or freedom or money from someone or something, it must sue for it. It cannot just give itself the authority to do so via legislation.
So the administration uses threats of audits to force banks to take TARP money. Then once the banks take the TARP money, they are now partially owned by the government. But even a tiny bit of government puts big pressure on bank executives to do as the administration says.
Napolitano concludes…
Our liberties are slipping away right before our eyes.
Vi
