TARP expected to get back $50b: so what does this mean for the rest of us? Absolutely nothing!

*banks will return some cash and then Geithner will turn around and give other troubled banks some much needed cash that Congress would not give. Should we expect the banks to lend? They are sitting on billions in cash and small business's and individuals are complaining all over the country that banks are not lending. But why should they? Mortgage rates at less than 5% (until recently). Would you lend out money for 30 years at less than 5%? Long risk means higher return expected. But when the government gets into the banking business, well, anything is possible. If banks are to lose so much on foreclosures and business bankruptcies and litigation, then why let them pay back the money at all? Because they want to drive the stock market up to 10,000 by lying about the extent of the damage. If some banks give back the money then PERCEPTION will drive up JPM, GS and MS, which alone can lead the market up a few hundred points. But not all of us are fooled. Elizabeth Warren, the TARP overseer, has asked for another stress test. Will she get it? Not likely. With fixed income earnings expected to offer a profit and commodities back up also likely to give bank earnings a boost, 2Q will be fabulous and us shorts will be eating crow. But as every mouthpiece is attesting that banks can earn their way out of this, Dick Bove comes to mind, I say wait until 3Q and beyond. Meredith Whitney says the banks can't possibly make money if they are not lending to not creditworthy people and defaults likely to continue with high unemployment, then Krugman will be WRONG about recession being over in September because banks will be back at the government trough.

Getting Out From Under the TARP
The Treasury is finally allowing some of the TARP recipient banks that posed the systematic risk to begin repaying the Treasury’s preferred stock funds. This will get these institutions out from under as much oversight from regulators, but more importantly it will take away the political-risk headlines and will reduce some of the importance over issues such as compensation and total loans. This list is partial and please be advised that it may change. We believe that these eight are among the ten banks which will be allowed to buy back the Treasury’s preferred shares:

American Express Co. (NYSE: AXP)
Bank of New York Mellon (NYSE: BK)
BB&T Corp. (NYSE: BBT)
Capital One Financial Corp. (NYSE: COF)
Goldman Sachs Group Inc. (NYSE: GS)
JPMorgan Chase & Co. (NYSE: JPM)
State Street Corp. (NYSE: STT)
USBancorp (NYSE: USB)