If you’re ever tempted to forget what a bunch of colossal idiots federal bureaucrats can sometimes be, the Treasury Department’s sale Wednesday of its TARP holdings in six banks is a useful, if infuriating, reminder. It’s as if the federal government has decided it’s a good idea to take tens of millions of dollars and set them on fire. These people are irresponsible dopes.
Here’s what happened: apparently because it’s getting tired of running the program, and with pressure from the White House, Treasury has hit on the bright idea of selling its remaining TARP holdings to the public rather than waiting for the banks themselves to redeem them. It held its first such auction Wednesday. On the block were $410.8 million in face amount of TARP preferred in six banks.
As it happens, I’m very familiar with all six banks on the list. The fund I manage even owns the common in two of them: Banner Corp. (BANR) and Seacoast Banking Corp. of Florida (SBCF). Yes, the banks encountered some severe credit problems during the recession (most small banks did). But they’ve dealt with their problems and are clearly on the road to recovery-as is evidenced by everything from their recent financial reports to the direction of their stock prices. All six banks figure to eventually repay their TARP investment in full. In fact, two of them were even permitted to participate in Wednesday’s auction!
So what did the geniuses at Treasury do? They sold their $410.8 million in preferreds–for $362 million, or an average 12% discount. Needless loss to taxpayers, therefore: $48.8 million.
W-w-why do bureaucrats pull bone-headed stunts like this? Forget about the size of the federal budget, $48.8 million is a lot of money–especially if all you have to do to get it is sit around and wait.
If I ran other people’s money in such an idiotic and irresponsible way, I’d get sued. The only reason I can think of that the Treasury went through with this misbegotten sale is that the people who work at the Treasury Department are getting bored running the program, and President Obama wants to have it wound down completely by the time the election arrives.
Sorry, that’s not good enough. These people are supposed to be public servants. Put aside politics for a minute: the very least we should be able to expect from the people who run the federal government is that they won’t decide to make their own lives easier by losing taxpayers money on purpose, for no reason. But that’s not what happened in this case. These people really are a colossal bunch of idiots.
What do you think? Let me know!