There’s no shortage of people talking about the Troubled Asset Relief Program (TARP) and how much has been given and how much has been spent and whether it makes sense to spend more. So I won’t add to that pile today. Instead, I want to talk about the un-TARP and by that I mean the companies that are doing really well that need some additional cash to really get rolling. In the latest issue of Forbes there is an article about Andrew Beal of Beal Bank called “The Banker Who Said No” and the article says “[Beal] finds it ‘crazy’ that bankers who acted irresponsibly are getting money and he’s not.” So do I.
I didn’t know much about Beal Bank until I read that article, but in a nutshell, Beal saw how nutty the lending industry was and literally reduced his workforce from 2004 to 2007. He didn’t participate in what we now know to be the craziness that led to TARP. Now Beal is growing aggressively and continuing to make sound banking decisions.
So why are TARP funds being given to the financial institutions and automakers that made the worst decisions? Shouldn’t we instead be at least hedging our bets and have a set of funds for the more promising financial services companies and automakers?
Speaking of automakers, take Tesla Motors. They make the best electric car going. It’s not cheap, but they have a cheaper one in the works. Innovative, good looking, fast, all electric. And it’s American. I am not going to suggest we throw all of our eggs in one basket, I am just saying that instead of throwing all of the relief funds at troubled assets, why not throw some money at the not-so-troubled assets as well.
I talk about outcomes all the time, and if the outcome we want is a strong economy with strong companies, it seems only logical that while we spend to help fix the companies that have been making some really bad decisions, we also ought to look at helping those promising companies that haven’t yet made any really big mistakes. I vote for some rethinking in the creation and spending of funds like TARP.
And if you can come up with a better phrase than un-TARP, I would love to hear it.
-Ric
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