Everyone Back in The Water

The news came over the wire a few weeks ago that Bank of America was repaying their banker bailout money, aka TARP. Today, Citigroup has announced that they too will be repaying the TARP to the tune of $20 billion dollars. Now, before you get any ideas that these developments mean that the respective bank's health has improved, consider that there is no mark to market accounting with which to make an accurate assessment of the aforesaid bank's assets. In truth, the banking industry's accounting these days is pretty much whatever these institutions (and their ilk) decide they want it to be.

Repayment of the loans, then, is not a sign of health, merely the triumph of a grand lie as it manifests in fictitious bookkeeping. The upshot of all this business is that the banks who are making the repayments will be even freer to do what they please now that they have un-tethered themselves from The Lender of Last resort, which happens to be you and me. Put another way, "Extend and Pretend" will continue to be business as usual until another crisis inevitably erupts.