No Parting from TARP

I've been expecting this for a while:  Treasury isn't going to let the banks pay back TARP money unless it damn well feels like it.


I'm not clear what the point is.  At this point, everyone knows which of the systemically important institutions can probably repay the money, and which of them can't.  Perhaps the idea is to keep Goldman from carrying out its purported plan to bust the compensation caps and thereby poach top talent from the other firms.

On the other hand, this seems certain to discourage financial institutions from participating in any future Treasury programs.  Once you take the King's Shilling, apparently you've enlisted for life--and your Congressional drill sergeants reserve the right to change the rules of your employment at will.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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