Yes, Banksters, Insurance Costs Money

What's happening now with the banksters is that they're desperately trying to repay their TARP money, presumably so that the federal government can't hold anything over their heads and mess with their executive pay packages, but also, predictably, to make a killing:

Banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program money may shortchange taxpayers by almost $10 billion if Treasury Secretary Timothy Geithner’s first sale sets the pace, data compiled by Bloomberg show.

While 17 financial institutions have repaid TARP funds, two have come to terms with the U.S. on the value of the rights to buy stock that taxpayers received for the risk of recapitalizing the industry. The first was Old National Bancorp in Evansville, Indiana, which gave the Treasury Department $1.2 million last week for warrants that may have been worth $5.81 million, according to the data.

If Geithner makes the same deal for all companies in the rescue program, lenders may walk away with 80 percent of the profits taxpayers might have claimed.

“For once we’d like to get a fair value when we come into contact with the banking system,” said Representative Brad Miller, a North Carolina Democrat and chairman of the Investigations and Oversight Subcommittee of House Science and Technology Committee. “We don’t want a ruthless bargain.”

Rep. Miller is such an angry hippie for even daring to ask for full value for the government's investment. The nerve.

While the banks will almost certainly get away with some manner of windfall by trading in these warrants, at the very least, they can replenish the FDIC with a progressive fee system:

The Federal Deposit Insurance Corp., which guarantees bank deposits against loss, yesterday approved a controversial change requiring big banks to pay a larger share of the bill for that insurance.

Bank failures are draining the FDIC's insurance fund, forcing it to collect larger assessments from banks, which foot the bill, at a time when many institutions can barely find the money to stay in business.

The five-member FDIC board voted yesterday to collect an additional $5.6 billion from the industry, raising the total annual bill to $17.6 billion. That amounts to a 5 percent tax on industry profits, the FDIC estimated.

The assessment could decrease the money available for lending to consumers and businesses.

That last line is so predictable, the proverbial gun to the head of Main Street that we've seen throughout this crisis. The truth is that the FDIC spends billions to rescue banks, and the banks rely on this insurance for the peace of mind of their customers and their own personal security. They can afford the fees - and without paying them, it kind of isn't insurance. The big banks caused this crisis and ought to pay at least a little bit to bail it out. This "but they won't have money to lend" argument has grown so tiresome.