Published by WallStreetWeather.net
Yesterday’s announcement by the Treasury that 10 financial institutions who took TARP funds totaling $68.3 billion have been approved to repay the money is a classic example of the unexpected twists and turns that occur when bold new initiatives are begun when Mercury is retrograde.
Mercury represents thinking, communication, and movement. The three week period three to four times a year when Mercury appears to be moving backward from Earth’s vantage point is better suited for putting the RE prefix in front of everything you do, rather than starting something from scratch.
Born when Mercury was retrograde in Libra (September 24-October 15, 2008), the TARP was troubled from the start as it was spawned from the panic that ensued following the Harvest Moon collapse of Lehman Brothers. The hastily written legislation to remove toxic assets from banks’ books first failed to pass the House on September 29, but by the end of that week was signed into law by President Bush.
Venus rules Taurus (banking and finance) and Libra (our relationships involving money). Libra is symbolized by the scales of equal balance representing fairness and equality to all parties involved. With Mercury retrograde in Libra, then Treasury Secretary Hank Paulson thought by injecting capital into the nation’s largest banks it would put the weaker banks needing more capital on an equal footing to those banks who could manage without it. In fact, Paulson said at the time that receiving approval for TARP money is a badge of honor as it symbolized a healthy financial institution. And the Treasury encouraged these healthy banks to use their TARP money to acquire other banks.
One month later with Mercury moving forward in Scorpio, what had been concealed now got revealed. Paulson admitted he had scrapped the original purpose of the TARP before Congress even approved the legislation. And the “healthy banks take TARP” game was up shortly after that when Citigroup needed an additional injection, followed by Bank of America (BAC) in January to help it digest its acquisition of Merrill Lynch.
During the Venus retrograde cycle in Libra’s opposite sign Aries (March 6 – April 17, 2009), banks became increasingly desperate to repay TARP funds after Congress and the Administration sought to stir up populist rage over AIG bonuses and executive compensation. TARP money had become a “scarlet letter,” as JPMorgan Chase (JPM) chief executive Jamie Dimon said in the bank’s Q1 earnings call April 16. Goldman Sachs (GS) proclaimed it was their “patriotic duty” to repay the TARP.
Now Mercury, Venus, and Mars are in Taurus. In fact Mars is exactly opposite where it was on the afternoon of October 13, 2008 when Paulson called the bankers into his office and told them they would “volunteer” to take TARP funds. Mars in Scorpio then reflected the banks indebtedness to the government. Mars in Taurus now reflects the action the 10 financial institutions have taken to strengthen their capital cushion in order to repay the loan.
In order for the banks to be completely free of the government, they will have to auction or buy back the government’s warrants estimated to be valued at up to $4.6 billion. And since it’s the “taxpayer’s money”, shouldn’t the auction be public so interested “taxpayers” could participate?
Between now and July 6, Mercury, Venus, and Mars in Taurus will challenge the Jupiter/Neptune alignment in Aquarius. All the optimism (Jupiter) that has sent the banking sector on a rocket ride (Aquarius) of rapid gains over the last three months could begin to evaporate from larger than anticipated credit card and credit derivative losses (Neptune).
Saturn rules time, life’s lessons, and structures. On July 3 Saturn in Virgo will be exactly where it was on October 13, 2008. The 10 banks have been approved to pay back the TARP, but what lessons did Wall Street and Washington learn from the experience? Lifting the TARP from some of the banks might feel like the financial system is working again, but without a new roof, the next storm could find parts of Wall Street flooded out again.