TARP Funds Coming Back

Big news this morning on the financial front is that Citi has finished negotiations with the Treasury and has a plan put together to repay $20 billion in funds received from the Troubled Asset Relief Program (TARP). As you may recall TARP was the initial government reaction to the current economic cycle. Put together in October 2008 by the Bush Administration, Treasury Department and Congress it allocated $700 billion to assist troubled financial institutions to prevent their collapse.

TARP was (and is) the centerpiece of discontent for many Americans who feel that the government should have just let troubled banks fail. One can imagine the size and depth of the ensuing recession had that occurred. More criticism was heaped on TARP when the Obama Administration used some of the TARP funds to prop up General Motors and Chrysler.

Through TARP the Federal government was able to add restrictions to recipients policies and procedures, mandate capital requirements and restrict lending practices. In several cases the Treasury, on behalf of the American people, became shareholders in banks receiving funds on a preferred stock basis. The largest of these stock holdings became Citi where the U.S. Government retained stock worth 31% ownership in the bank.

Last week, within hours after Treasury Secretary Tim Geithner testified on TARP before a House Committee last week, Bank of America announced it has repaid $45 billion of TARP funds it received and has repurchased all preferred stock owned by the government. This morning's announcement that Citi has reached an agreement to repay its $20 billion in funds and repurchase government's holdings also stated that through the TARP period Citi paid $3.1 billion to the government in dividends and interest. By June Citi will have repurchased all preferred shares held by the Federal Government.

Of the big banks and firms that received TARP funds Wells Fargo is left with no announcement of a plan to repay the $25 billion received. Since Wells did not visit the TARP well twice it has been operating without many of the restrictions, including compensation limits, imposed on other institutions, as such it may not be in as big of a hurry to shove $25 billion in capital out the door.

When enacted TARP had a price tag of $700 billion. To date Secretary Geithner indicates $550 billion of the funds have been allocated and that by December 2010 $175 billion will have been repaid. Somehow through these numbers, $550 billion spent and $175 billion repaid, Geithner told Congress that the cost to the taxpayer has been recalculated from $341 billion to $140 billion. Where the gap of $135 billion gets made up ($550B spent $175B collected leaves $375B uncollected) I don't know.

The biggest question for me on this phase of TARP, repayment, is where will the repaid funds go? With Citi's announcement coming on the heels of Congress slamming through a $1.1 Trillion spending bill this weekend and Obama and Congressional Democrats talking about another $200-500 billion in "stimulus-but-don't-call-it-stimulus" funding and the on going multi-Trillion dollar debate on health care restructuring, I am a little skeptical the repaid TARP funds will be used to pay down debt or go back in the general fund.

While not perfect, thus far it appears the TARP investment in several of America's major financial institutions was a good bet. While GM and AIG are still out there to remind us that no investment is without risk, Bank of America, Citi, Wells Fargo and Chase have shown the infusion of funds kept them open and able to acquire weaker, troubled institutions, saving taxpayers, investors and depositors hundreds of billions, possibly trillions. They are not out of the woods yet however and face significant future risks and challenges, not the least of which will be whatever final legislation comes out of Congress on financial regulations and restrictions. This Congress and Administration has so far shown the ability to be over-reactive to issues and problems restricting markets and future growth, if this happens with banking credit will tighten further. Also on the horizon is the commerical paper on the banks' books, while the focus the past few years have been on residential foreclosures the other shoe is commerical loans that are coming due or facing major rate adjustments through their notes.

Hopefully the health of our lending institutions has recouped enough to withstand coming challenges and restore America's faith in the institutions that hold and protect their hard earned money.

Below are questions I have asked myself throughout the past week. Instead of writing what my answers to them would be I am interested in any answers you may have, or additional questions you have asked yourself.

For the week starting Saturday December 5, 2009 here are some questions I have had:

Now that we have enough for every month, will there be a Tiger’s Girls Calendar?

What is the population of the United States?

Why is President Obama so slow to inflict pain on foreign terrorists but so quick to want to inflict it on businesses and taxpayers?

Role models or lessons in morals and ethics?

(For SoCals) Have you noticed how many days a years we can see the mountains over the past several years, even in the summer?

Senate Health Care Plan is guaranteed to increase California State expenses by several billion dollars due to pushing more people into MediCal coverage, think the students and faculty protesting cuts to UC and CSU budgets know, care or understand the linkage?

Egg nog or spiced hot cider?

Why don’t the elitists meeting in Copenhagen who are going to chastise me and all of America and demand we use squiggly light bulbs that are extreme hazardous, not buy plasma televisions, drive French made Deux Chevaux, smoke Gallois, and carpool, why don’t they plane-pool and limo-pool for the conference?

Best sandwich in Long Beach area?

Newpapers and the AP report that Democrats are trying to “stall” or “block” health care reform despite having a filibuster proof majority in the Senate and overwhelming majority in the House, is there any wonder their subscribers are dropping like Obama’s favorables?

If you were given the opportunity to name an SUV what would you name it?

Didn’t global temperatures have to rise to end the first Ice Age?

What intellectually stimulating game(s) do you like to play?

What would happen if our state and federal legislatures had to operate under the regulations they put on businesses?

Hard yolk or soft?

What is your biggest computer frustration?

Is there a bigger ass in American politics than Harry Reid?

How do they know what the exact temperatures were during the Paleolithic Age?

Do you think federal money should be used to fund abortions?

Do you play an instrument?

What was the cost to the city to change email addresses from firstname_lastname@longbeach.gov to firstname.lastname@longbeach.gov? What is the cost to everyone else who has to take the time and resources to make the change from an underscore to a dot?

Does this have a Soviet or Stalinesque ring to it: “"Proposals to Accelerate Job Growth and Lay the Foundation for Robust Economic Growth." ?

How long can a country be labeled “Developing” before it should be labeled “Failing”?

Cocoa or hot chocolate?

Is the gathering in Copenhagen Global Warmists or Socialists?

Who knew the nerdy science guys are conformists aggressively pursuing income and glory at the expense of independent research and exploration?

Did you see that Congress passed a spending bill that includes a $1.6 Billion subsidy to Amtrack?

Why do dry cleaners put men’s and women’s clothes in the same plastic bag?

Who will win the Heisman Trophy?

Cookies or Pie?

So those are the questions, what are your answers? Click on the comments button below and let us know what you think.

Ethics

What are the ethics of hoping someone has misbehaved so you can back-up your "gotcha" philosophy?

Is it ethical to create misconceptions for other people about someones behavior?

How ethical is it to destroy someone else's personal relationship?

Can people be trained to be ethical or are ethics learned as they are experienced?

If someone must attend "ethics training," whose ethics are they learning and how does he know the trainer is ethical?

If someone does something which you disagree with does that make them unethical, even that act is legal?

Whose ethics are more important, yours, mine, society's, whose?

Is it ethical to presume someone is misbehaving merely because they are in personal contact with someone you mistrust?

I love conversations about ethics. For the past three or four years I have had the honor of facilitating a discussion on how to define ethics for Leadership Long Beach's incoming class of participants. When a discussion on how to define ethics is started it quickly becomes apparent that ethics, like art, is hard to describe; we know it when we experience it. Or better yet in regards to ethics, we know it when we don't experience it.

The challenge with defining ethics, for me, boils down to "whose ethics?" Your personal ethics based upon your moral code, or my ethics based on my moral code? The ethics of your company or organization? While many like to purport a single standard of ethics, I challenge the assertion. A few simple questions shows that ethics are not universal. Is abortion ethical? Is the death penalty ethical? Is the confiscation of private property ethical? Is denying the homeless woman asking for food ethical? Is killing someone ethical? If they have broken into your home and endangering your children? Is something ethical just because it is legal?

Ethics, for me, are actions directed by morals that separate "good" from "bad." If we share the same morals then we probably share many of the same ethics. Companies and organizations have a culture that determines the ethics of that organization, typically based on the morals of the leadership and their values. As a society we have overlapping ethics, picture everyone walking around with the "ethics circle" surrounding them, some circles perfectly overlap and some are never touched--almost as if within society they have no circle. From the shared morals and ethics of the majority we derive our laws. Being a Republic our laws then govern us. Shared ethics codify in law.

Part of my ethics is understanding they are mine and may not conform to yours and vice versa. Therefore it is probable there are times when you consider me unethical, or I consider you the same. As long as neither of us is breaking the law and can disagree on what is ethical we can peacefully coexist. When you begin to feel that your ethics are more important than mine, that your moral compass is superior to mine, that I am being unlawful, immoral and unethical, in a situation where I feel I am not, when that happens we have a problem.

I am not a big fan of Conspiracists (don't look it up, I just typed it). Those who think every move made by someone in leadership or power is either unethical or illegal and done merely for self-advancement or monetary gain. You know the ones I am talking about, an elected official sneezes in their presence and they accuse them of trying to give them H1N1 to silence their criticism. The ones who find someone they dislike and then they create dislike and mistrust within the community. Using broad brushes they paint anyone who comes into contact with that person because to them he is unethical and always dealing in unethical matters. Conspiracists enroll others behind their attacks and accusations with the sole goal of discrediting other people's character and motives, essentially working to destroy careers. All under their banner of "ethics." Their perception of right and wrong. Because someone disagrees with them or wants to pursue an opportunity they do not like Conspiracists become personal in their attacks, move the discussion away from the opportunity or issue and instead try to make it a discussion on character. Conspiracists tend to be narcissistic and holier than thou, and me.

In the process they damage a community, create divides, breed contempt and facilitate mistrust. When they have accomplished this they smile and say, "look at what I have done, I have won."

For those not in the Long Beach area such a construction of false information and false accusations of unethical behavior is gripping our City Hall. Our City Council is immersed in discussions and debate and details to determine how to control individuals ability to speak with members of our government. A howl has arisen in our community demanding that anyone who leads a company, wants to create opportunities in our community for jobs and development, be limited in how and when and where they can present their ideas and opportunities to city officials. Our city is on the verge of codifying mistrust and declaring no one behaves "ethically" on their own, essentially saying the city is in the habit of hiring and electing unethical individuals whom we should mistrust.

This is all as a result of an over-reaction to a trip taken by two lifelong friends and their families. Two men who grew up together, whose wives and children are friends, had a weekend get-away with their wives as friends are apt to do. One friend is a consultant and represents a myriad of businesses and organizations who have businesses, or wish to have businesses, in the City of Long Beach. One friend works for the City of Long Beach and reviews and analyzes new projects and developments for the City Manager and Council. The families stayed at a hotel owned by one of the consultant's clients and at check out, without the city employee's knowledge or consent, issued a discount. We know this because upon returning to Long Beach and learning of the discount our ethical city employee repaid the discount and disclosed it to his bosses.

His ethics empowered him to action to do what was right. Now he is under scrutiny and an aura of mistrust and deceit is being built around him by the Conspiracists for they have long ago put his friend the consultant on their radar as someone to attack personally and professionally. By doing the right thing, by behaving ethically, our stalwart, competent and professional city employee has been tarnished.

Is it ethical to attack someone for doing what is right? Or would it be ethical to say, "this is what we expect of all of our employees, when they find out something happened that is not right to expose it, accept it and correct it?"

By their actions the Conspiracists have created an environment where future mistakes that are discovered may be covered up instead of exposed for fear of personal attacks and possible damage to their careers. By attacking two men who are life long friends for being friends the Conspiracists have made our city a bit more unfriendly to businesses, have created a bit more separation between City Hall and city residents and businesses, have created a bit more "Us" versus "Them" in our community. How is that for ethical behavior?

Ethics, I know them when I experience them, I know them more when I don't. Craig Beck is a good man who does good things for our city. Mike Murchison is a good man who does good things for our city. Both have good morals, good values and good ethics. Both work hard to improve our city and community. Neither deserves the treatment they are getting from the Conspiracists, who are getting too much press and exposure.

I hope there friendship continues for many, many years and it includes more trips together enjoying each others company and families. It isn't ethical to turn our backs on our friends when they have done nothing wrong.

A Desire Named Street Car

Build and you will use it seems to be the theory behind Councilwoman Suja Lowenthal's new pet project: streetcars criss-crossing Long Beach. Or perhaps it is her turn to support something because the City Council wasted money, yet again, on a consultant and money spent needs defense.

It seems a few years ago the Long Beach City Council paid $69,000 to a consultant to look into the feasibility of putting street cars into Long Beach. Naturally the feasibility is great, otherwise the $69,000 would have been a waste. We'll just widen a street here, take out parking there, lay track at $25 million per mile, and once built the streetcars will be magical. Businesses will spring up along the tracks, Southern Californians will give up their cars and all of downtown's retail woes will be solved.

When it comes to the pro-streetcar crowd they love to quote development in other cities where streetcar lines have been added, and say things like, "streetcars aren't about transportation they are about development." That's good because like the data being released by the White House on jobs created by the Stimulus Package the numbers released by cities on the development resulting from streetcar lines is just as cooked. Take Portland for instance, the beacon of light for those who want to add a streetcar line to a city near you, or around you if you live in Long Beach. Portland boasts of $2.8 billion in new development because of its streetcar lines being put in; and politicians like Lowenthal are quit to quote the number. Has she bothered to Google the figures? Virtually every new development that has occurred within three blocks of the street car line are tossed into the $2.8 billion dollar number. Including hundreds of millions of dollars spent by Portland State Univeristy, millions spent on parking garages, new office buildings that were in planning stages before the streetcars went in, and on and on.

Also not mentioned are the subsidies spent by Portland, over $1 billion and counting, to sustain the streetcars and other light rail, encourage development and try to sustain the projects. But money is not the problem for Long Beach. Lowenthal says it won't cost Long Beach residents anything from the General Fund, we'll just use Federal dollars--it's not as if we pay Federal taxes so it must be OPM, Other-People's-Money. Not surprising for liberal politicians to consider Federal money "free money" to the recipients, Lowenthal is ready for the Democratic Caucus in Congress. If hundreds of millions of dollars are available to build a street car why is that same money not available to improve our current transportation system? Why not use those funds to improve existing corridors and bus routes? Why not let the Federal government keep the money, lower our taxes and extend credits to small businesses? Because it's not pretty and red and has a bell that goes clang-clang as it creeps down the street.

The purpose of the streetcars is development. Development of downtown Long Beach which has seen hundreds of millions of dollars spent on it behalf over the years, from shiny new upscale condo towers, to funky new lights, to redevelopment funds for businesses, to The Pike and Aquarium. And still Pine, Long Beach Boulevard, Atlantic, Broadway, etc have vacant store fronts and businesses that open and close before their first anniversary. Streetcars are the latest "thing" that will finally get a consistent and significant amount of spending by consumers downtown, supposedly. Streetcar development is dependent on high density housing. Downtown Long Beach has plenty of high density housing, unfortunately most of it in the immediate surrounding areas is high density use in low density buildings.

Until our politicians look at the reality and quit using poli-speech to describe problems the problems will never be addressed. Downtown retail is not a failure because there is no way for people from other parts of the city or region to get there--the 710 terminates downtown, several bus lines from Bixby Knolls to Belmont Shore terminate there, a bridge from the Harbor Freeway and San Pedro terminates there, the Blue Line terminates there, the Passport was created for there. Downtown retail is a failure because it is surrounded by low cost, overcrowded, gang infested housing and neighborhoods. While an upscale residential base has been increasing downtown, it is not enough to sustain any consistent retail development. In the meantime within half to three quarters of a mile of Broadway and Pine are over thousands of low income housing units that are overcrowded and surrounding downtown. A hundred thousand people, probably more, who don't shop downtown, don't eat downtown and cost downtown, and the rest of the city, millions in public safety, health and other services.

City Hall keeps approving and looking to add low cost housing to Long Beach, most of it around the downtown area, then on the next agenda item spend more money on more studies to try to find a way to get retail development downtown to take hold and succeed. Lowenthal's desire for streetcars is just the latest idea to syphon more funds in the future from the General Fund to sink into the downtown retail black hole--and along the way encourage high density development.

Maybe it is time for City Hall and council members from the 1st, 2nd, 3rd, 4th, 5th and 6th to take a look north of the 405 for a change. Take a look at Bixby Knolls and the redevelopment and re-invigoration that has been occurring along Atlantic Avenue. New businesses opening and while struggling are succeeding, despite the economic downturn. Vacant buildings being creatively used for the community. Clean streets. Building owners slowly renovating their facades and interiors. A very vibrant relationship between local businesses and surrounding communities. All without a streetcar and very little investment from the City, especially when compared to the investments made downtown and in other parts of the city. But it was all done with one common factor, Blair Cohn who is the leader of the Bixby Knolls Business Association. He was determined to forge a positive relationship between local businesses and local residents, and it is working. Where is that leadership downtown?

Instead of spending another $500,000 plus next year to continue the study of streetcar feasibility, and another $1 million plus the year after that to continue the process, it would instead behoove Lowenthal and her constituents to promote the use of current public transportation, including the Passport bus line that was created specifically for what Lowenthal wants the streetcars to achieve: bring people downtown. If you want downtown retail to succeed and people from Bixby Knolls, Belmont Heights, El Dorado Park Estates, Los Altos to go downtown and spend money, give them something to go for besides a few restaurants and a 7/11.

In the meantime, let's cut our spending losses on the streetcar idea before the city gets sucked into a spending hole for the future. It we don't Long Beach will have a streetcar nicknamed quagmire.

Just Some Questions

Below are questions I have asked myself throughout the past week. Instead of writing what my answers to them would be I am interested in any answers you may have, or additional questions you have asked yourself.

For the week starting Saturday November 28, 2009 here are some questions I have had:

Do you know what is on the back of pennies minted in 2009?

Would you rather have “first” or “best”?

What happens when oil goes back over $100 a barrel and gas over $4.00 a gallon at the pump? Will we get serious about domestic production then?

Whipped cream or ice cream?

Do you ever use your laptop on your lap?

Who is the most annoying person on television that you still watch?

Are the people reporting on the stimulus funds “running out” the same ones who covered the passage of the bill in February?

Are reporters stupid or do we just not get it?

What is “it” anyway?

Who or what inspired you this week?

Do you put on your left shoe or your right shoe first?

Do you prefer sunrises or sunsets?

Oldest piece of clothing you still wear regularly?

Dictator for a day how do you solve this problem: One mother on government assistance with multiple children by multiple fathers?

Should couples with no children pay lower taxes?

Streetcars?

How many times a week is “Law and Order” on?

With today’s technology allowing almost infinite storage capabilities, why would scientists destroy and/or discard any raw data?

When you leave your phone number for someone on a voice mail do you say it slowly and repeat it at least once? If not why not?

How can you have a “jobs summit” and not invite the Chamber of Commerce?

Is politics about defending whistleblowers who blow the whistle on your enemies and asking prosecution of those who blow the whistle on your allies?

If the Executive Branch of government, at any level, is disorganized how is the rest of the structure?

Why would you invite labor leaders to a “jobs summit”, isn’t their purpose to limit the number of jobs in a given field or industry to those who are in a union?

Do you brush your teeth before or after you shower?

Senior year in high school; what song just popped in your head?

“And if there are things that we're doing here in Washington that are inhibiting you (from creating jobs/increasing employment.DCS), then we want to know about it”. Really? You really want to know about what you’re doing to inhibit job and economic growth?

Window or aisle?

Cookies or Pie?

So those are the questions, what are your answers? Click on the comments button below and let us know what you think.