–$3.5 billion stealth tax

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

The private sector just paid $3.5 billion in taxes that were not counted as taxes.

Yahoo Finance
Regions Financial, Last of Huge TARP Banks, Repays $3.5 billion

By Daniel Gross

The deficit for the current fiscal year just shrunk by $3.5 billion. Regions Financial, the Birmingham, Ala.-based bank that was one of the largest recipients of TARP funds, this week bought back the preferred shares it sold Treasury in November 2008 for the full face value of $3.5 billion.

On March 14, it raised $900 million by selling common stock to the public. And on April 2 it completed the sale of its Morgan Keegan investment banking unit for $1.2 billion to Raymond James. Those actions, combined with its own cash, enabled it to present a $3.5 billion check to Treasury.

But the account isn’t entirely closed. When Treasury bought preferred shares in banks as part of the Capital Purchase Program, it also received warrants. Treasury still owns the warrants and will likely sell them at some point this year. Judging by past experience, that could bring in another $200-$300 million.

Regions was the last remain multi-billion dollar TARP recipient to pay back its funds. Synovus Financial, which owes $967 million, now bears the unwanted status of the largest remaining institution in the Capital Purchase Program.

That $3.5 billion, plus previous and future payments, is identical with tax payments. Like all federal taxes, these payments deduct dollars from the private sector, and do nothing for the federal government, which being Monetarily Sovereign, neither needs nor uses dollars sent to it.

While most people seem to cheer when the federal government reduces the money supply, that is due to ignorance of Monetary Sovereignty and the economic need for a growing money supply.

Applying leeches is a poor way to cure anemia.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports


10 thoughts on “–$3.5 billion stealth tax

  1. You really need to work for the Treasury, especially TARP. You would see how things really work. BTW CPP managed all 1407 TARP funded banks, which 50% are foreign banks.


  2. Unretire, apply for a Treasury job, get that job, go to work in DC, go to tons to meetings, take the metro everywhere, and then you will find out. Sitting in Chicagoland and telling everyone that they are wrong and you are right solves nothing. I’m 64 and work everyday to get things done, so I don’t have a clue how your world operates.


  3. You generally seem pragmatic, so I would think you would be happy that the banks are paying back the funds – thus addressing the argument that this was a government handout / taxpayers are paying. The next time government intervention is needed, people can point to this as evidence that it doesn’t cost the government / taxpayers anything.


  4. Sorry Steve,

    But having people do the wrong thing, just because those ignorant of economics think it’s right, doesn’t make me happy. It also would not make me happy to see the deficit become a surplus, which made lots of politicians and the media delirious, and caused a recession.

    That “pragmatism” means the next time the government stimulates the economy, it then will take the money back, which will lead to a long, agonizingly slow recovery or another recession. Sound familiar?

    Rodger Malcolm Mitchell


    1. I respectfully disagree. If you ever succeed in your mission of conniving a sufficient number of people about monetary sovereignty, great. Until then we all must work in the system we have. That system includes people who insist that the government is for military action only (and any other benefits they alone receive). Wrong, ok, but we still need to include everyone. That means that policies must be palatable, even if wrong headed.

      For me, I say pay it back as a matter of justice. We can’t have companies wreck the economy and the getting a handout. What’s their incentive to not f things up next time? If nothing else, how are we to decide who gets money? It is ripe for corruption and lobbyist action.


      1. I’ll keep conniving to teach people the facts of economics, one of which is this: Pumping money into the economy helps the poor and middle classes. Taking money out of the economy hurts the poor and middle classes.

        You may feel it’s unfair for businesses to benefit from their own poor performance, but businesses are where the 99% work. Take money from businesses and you take money from the 99%.

        Taking money out of the private sector and sending it to the federal government, which neither needs nor uses it, may appeal to your sense of justice, but it takes bread off the table.

        Going along with what people believe, even though it’s wrong, has bad consequences for the people.


  5. Galt,

    So you are employed by Goldman Sachs and J.D., uh I mean the U.S. Treasury? Yet you believe you are actually doing something beneficial? You are nothing more than a slave and enabler of the multinational corporates who have succeeded in destroying our republican form of government, repressing any future possibility for a democratic one.
    You actually work every day destroying our state sovereignty in the public interest, However, those who believe as you are happy our government has been overthrown for direct rule by transnational corporations whose supra-state rights are embedded in small-print treaty regulations conferring rights on them alone. Disgusting!


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