If you remember, the original TARP was seen as the ultimate panacea for what troubled the US financial system.
The original draft by Paulson and Bernanke was just 3 pages long. It went through several changes, but the initial vote defeated the TARP bill on September 29th. Subsequently, the bill was revised and then approved.
However, the stock market dropped 8.5% on this day after the rejection. In a risk-off move, the US dollar strengthened 300 points against the Euro on that day.
A similar scenario can be brewing for next week in the German Bundestag. The parliament must bring up and approve the Greek bailout money next week. The process should be highly contentious and create market uncertainty of approval. I expect this fight/pessimism to occur by mid-week. The major risk is that this is not a one week process and may be dragged out for another week similar to what Congress did in 2008.
Finance ministers want the Greek bailout wrapped up by the May 10th European Union summit so that funds can reach Greece by their May 19th refunding. The German vote next week will be critical and it’s not a done deal. While I expect a deal to be eventually done and led by the IMF, the process of getting there will be ugly German political sausage making. Bratwurst at its best!
Andrew B. Busch Director,Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece andreach him here and you can follow him on Twitter at