Obama, TARP money, and Not-news

Lately, in the financial world, there has been a lot of talk, but not a lot of news. Since the ZIRP was instituted, not a whole lot of bailout-related action has taken place. Recently, though, the Bank of England dropped interest rates to 1.5%, which for historical perspective is the lowest it has been since the 1600s. It will be going lower still.

Anyway, lately Obama has been pushing for the passage of the second $350B TARP money now—before he takes office. Meaning that Bush and Paulson would have access to it in the last week of their administration. Both Obama and Bush have threatened to veto any legislation that rescinds the money, which there isn't the least doubt in my mind would fail. Nobody doubts Obama will get it eventually, but why now seems a little odd. Perhaps there is a politically unpopular intention for it that Obama does not want on his record. Since Paulson gave $250 million to major banks with no requirements that they use it to help solve the mortgage crisis, which was the intention of the bill—and then the rest of it went to AIG, and then more to Citigroup, with a small fraction left to the automakers—Congress has been leery of giving the Bush administration the second half of the money.

Along with a series of ever-worsening job reports that seems to have stunted a bear-run in the markets many were expecting, there has been talk in the news about both Citigroup and BoA coming for seconds (or thirds) in terms of bailout money. BoA's purchase of Merril and Citigroup being Citigroup are coming to haunt them. JP Morgan is buckling, no doubt related to it's acquisition of Washington Mutual, and one wonders when we will start hearing the same about Wells Fargo and buying Wachovia. (UPDATE [1/28/09]: ...and here it is.)

At the end of the day, a comparable amount of bailout money was handed to Citigroup in a couple weeks what took Bill Gates to amass over his career, and that has done almost nothing to prevent Citigroup's unraveling, and they still want more! After selling off one of their more valuable assets, Smith Barney, it appears further dismantling is soon to follow.

UPDATE: Well here's some news: today, after the above was posted, the Senate released the second $350B of TARP bailout money.