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Employment Claims – No Wonder Obama Wants $30 Billion From TARP

January 28, 2010 12:10 pm

Last night, President Obama put on a  great show and provided us with a peek into the new multi-billion dollar programs that he is putting forward. One of those is a $30 billion jobs initiative. From the looks of the initial and continuing claims, thast would be a great idea.

BUT, the thought of getting the funds from the TARP paybacks is ludicrous. There are specific rules that state that the TARP is only to be used for the backstop of banks in an emergency situation has already become stretched. Think about how funds were used to bailout the auto industry and other industries that were not specifically identified by the initial TARP plan.

To be totally honest, it made for good politics in a time that President Obama’s ratings are close to the lowest they have been since he was inaugurated. Adding to the populous desire for blood-from -bankers, he said that the money will not just come from TARP, but specifically  from the amount paid back by the banks. So, in effect it looks like it is a gift from the bankers. Note that as of the time of this writing, the big banks are up on the session- Goldman (GS), Citi (C), Bank of America (BAC), Wells Fargo (WFC) and JP Morgan (JPM). So, how hard are they taking all of the claims that banks will paying up for anything?

From Briefing.com

Highlights

  • The initial claims figure for the week ending Jan. 23 declined by 8,000 to 470,000 new claims.
  • The consensus projected a much more substantial drop of 28,000 claims.
  • Continuing claims fell from 4.659 mln claims to 4.602 mln for the week ending Jan. 16. The consensus expected continuing claims to decline slightly more to 4.593 mln.

Key Factors

  • Last week, the Department of Labor (DOL) announced that the increase in claims from 444,000 to 478,000 was not due to economic conditions, but from administrative backlogs in the processing of applications. The DOL has not announced if the backlogs continued into this week’s data.
  • The drop in continuing claims does not suggest an increase in hiring. Most of the decline was due to the expiration of unemployment benefits.
  • Emergency unemployment extensions have also begun to expire as the number of workers receiving emergency benefits declined over 300,000 for the week ending Jan. 9.

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Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.

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Written by Andrew Horowitz · Category(s) Economy, Markets    |    

2 Responses to “Employment Claims – No Wonder Obama Wants $30 Billion From TARP”

  1. Ramiro H. Chavez on January 29th, 2010 4:05 pm

    I believe the 30B are for small banks, so they could lend to small businesses. I do not think it is specifically for jobs

  2. Ron Sturgeon on February 5th, 2010 5:46 pm

    So Obama is going to free up the loans to small businesses?
    The Banking System Doesn’t Need More Money

    As a small business owner with a lot of friends who also own small businesses, I get tired of hearing all the news stories about how small business lending is going to get a shot in the arm from President Obama’s programs or any other source in the foreseeable future. Yesterday I listened to a speaker from one of the large banks talk about how many loans the bank was making, doing its share to get the country moving again. All the banks are simply not making business loans unless they are absolutely gold-plated. Period. This isn’t because they don’t want to make loans; it’s because they’re being criticized by examiners.

    The regulators have made it clear to banks that they will be criticized for any loan where the borrower takes out any cash, regardless of the underlying fundamentals or collateral. This is nonsensical.

    I understand that real estate is depressed, and that values are uncertain, and that tenants are moving, and all the other fundamentals.

    The answer is simple: The regulators need to relax—not on every loan, but use some common sense!

    I feel for all the small businesses in America that are crippled. They dont understand why their debt free building isnt worth anything for collateral on a loan, or why their receivables which have deteriorated only slightly are now not worth anything as collateral.

    Here’s the simple truth from one of the “little guys” in a small business who sees the misery here in the street, and just can’t relate to our government’s plan to put more money in the system. There is plenty of money out there; someone just needs to stop sitting on it, after the regulators tell them it’s ok to lend some with solid underwriting policies.

    This story has been truncated, see the whole story at: http://www.mrmissionpossible.com/blog/auto-salvag…

    Ron Sturgeon
    5940 Eden
    Ft. Worth TX 76117