Documents: Paulson forced 9 bankS to take TARP

NEW YORK (AP) — The chief executives of the country’s nine largest banks had no choice but to accept capital infusions from the Treasury Department in October, government documents released Wednesday have confirmed.

Obtained and released by Judicial Watch, a nonpartisan educational foundation, the documents revealed “talking points” used by former Treasury Secretary Henry Paulson during the October 13 meeting between federal officials and the executives that stressed the investments would be required “in any circumstance,” whether the banks found them appealing or not.

Paulson also told the bankers it would not be prudent to opt out of the program because doing so “would leave you vulnerable and exposed.”

The meeting was hosted by Paulson, Federal Reserve Chairman Ben Bernanke, FDIC Chairman Sheila Bair and current Treasury chief Timothy Geithner, who was then president of the New York Fed.

The banks that were initially required to accept the funds were Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., State Street Corp., Bank of New York Mellon and Bank of America Corp., including the soon-to-be-acquired Merrill Lynch.

Paulson wanted healthy institutions that did not necessarily need capital from the government to participate in the program first to remove any stigma that might be associated with a bailout. He told reporters during a news conference that the intervention was “what we must do to restore confidence in our financial system.”