What is the meaning of ten American banks' recent reimbursement of the funds they had been advanced in the framework of the Troubled Asset Relief Program (TARP), the government's rescue program for the banking sector?

    If you believe them, now that their health is restored, they want to eliminate the stigma of semi-nationalization - to which the aid of between $5 billion and $25 billion each of them had enjoyed and become assimilated to - as soon as possible. But the concern to lift the ceiling on bonuses paid their top managers is undoubtedly not an immaterial factor in their decision: their reimbursements so far have only affected those advances that were subject to that condition!

    Why such haste? The stock market has recovered a bit - even though one must still wonder what may explain that in the absence of any good news on the economic front. Clouds continue to mass: in American residential real estate, present payment arrears promise losses five to six times greater than those suffered during the collapse of sub-primes for the years to come; a comparable volume of losses is to be anticipated in the credit card and commercial real estate portfolios. That's something the banks cannot be unaware of. So could the present haste have something to do with the tempest that threatens? Recent experience allows one to think so.

    Let us, indeed, remember the final months of the independent real estate credit establishments, the Countrywide and others, IndyMac, and what we witnessed between the moment when their end appeared inevitable and their takeover.

    In mid-2006, rumors of a Bank of America purchase of Countrywide were circulating. It was not yet a question of the fire sale that ultimately took place in January 2008, but of interest displayed by an important bank in the number one real estate credit institution, then apparently in good health. Now the emails recently published by the Securities and Exchange Commission (SEC), the supervisory authority for the American stock market, reveal the anxiety of Countrywide's top managers during the same period. However, for the mid-level executives of the company - where I myself was then employed - there was no doubt that the purchase rumors emanated from senior management and were motivated by a desire to pump up the stock price. Senior managers' exercise of their stock options and systematic stock sales began, in fact, shortly thereafter. Thus did CEO Angelo Mozilo succeed in completely selling out before the final fall, for a total profit of over $700 million.

    The resurgence in American banks' stock price has already begun, and let us wager that the good news of their newfound independence will pump up their prices still further - investors will certainly be unaware that the redemption of the options granted the government in exchange for the assistance obtained through the intervention of TARP will soon sink their earnings.

    If the parallel with Countrywide means anything, then, for the ten banks that have today reimbursed the TARP money, it's simply a matter of cleaning out the cash register before finally leaving the key under the door. When the trillions lost are revealed, the few billions their upper management will have affected in extremis will go by - you can put money on it - relatively unnoticed ...

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    Paul Jorion is an economist and anthropologist.

    Translation: Truthout French language editor Leslie Thatcher.

    http://www.scribd.com/doc/13465382/Boston-Globe-18-Mars-2009-La-crise-en-photos-en-crise-financiere-nouriel-roubini-GEAB-Sartoni-Abadie