Remember that the TARP program was meant to be a means for banks to voluntarily sell troubled assets. That’s what everyone told us it was for when the bill was rushed through congress.

Seven hundred billion dollars is a lot of money, however, and when banks didn’t rush to sell, that money started burning a hole in the Treasury’s pockets. So the United States forced banks to give up ownership in their businesses to the government, in order to take money the banks didn’t want to take.

We plan to announce the program tomorrow—and—that your nine firms will be the initial participants. We will state clearly that you are healthy institutions, participating in order to support the US economy.

This is a combined program (bank liability guarantee and capital purchase). Your firms need to agree to both.

• We don't believe it is tenable to opt out because doing so would leave you vulnerable and exposed.
• If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance.

This is likely what Upton Sinclair meant when he attributed to George Washington the famous saying that government “is a dangerous servant and a fearful master; never for a moment should it be left to irresponsible action”. Obviously, this is an important example to remember when a legislator proposes a bill with wide application and promises to use it only in specific circumstances.

More importantly, however, the lesson applies just as well to any bill where this much money is involved. Money flows easily around restrictions. The more money is at stake, the easier it is to find an excuse to use it. Treasury had a very large hammer. The urge to nail someone to the wall was too strong. We should never have given them that hammer in the first place.