TARP Report – “We don’t even know where the money went”
So let’s give them health care too!
Sorry, couldn’t help myself. The quote in the title is from Democratic Representative Daniel Lipinski of IL. It’s a good preface to a Treasury Department Inspector General report issued today which was rather scathing. USA Today provides the “executive summary”:
A Treasury Department watchdog is warning that a key $700 billion bailout program has damaged the government’s credibility, won’t earn taxpayers all their money back and has done little to change a culture of recklessness on Wall Street.
Of course it also claims that the bailout is responsible for keeping the financial system from collapsing (which, of course, is still very debatable).
“The American people’s belief that the funds went into a black hole, or that there was a transfer of wealth from taxpayers to Wall Street, is one of the worst outcomes of this program, and that is the reputational damage to the government,” said Neil Barofsky, special inspector general of the Troubled Asset Relief Program (TARP), in an interview.
President Obama was doing a little fundraising with Wall Streeters last night trying to get a bit of the pelf into the coffers of the Democrats. As most Americans will most likely view it, a little quid pro quo (or a little “keep that pay czar away from me”.)
The report criticized Treasury’s implementation of the program and its lack of transparency, making 41 recommendations, 18 of which were implemented. Barofsky says it’s “extremely unlikely” that taxpayers will recover the $77 billion committed to the ailing auto industry or the $60 billion in TARP assistance to American International Group as part of a pledge of up to $180 billion in aid. An additional $50 billion to modify unaffordable home mortgages “will yield no direct return.”
But, but, but we were promised it would all be repaid – with interest.
Of course those of us who knew better lobbied against it in the first place. Unfortunately, this is one of those times you wish you had been wrong:
Financial experts say it’s no surprise that the government won’t be able to recoup all of its investment in TARP. “Anybody who said this was all secured lending that would surely be repaid was kidding himself,” says Lawrence White, economics professor at New York University’s Stern School of Business.
To be sure, 47 financial companies have repaid $72.9 billion to the government. And Treasury has received interest and dividend payments or sold warrants for an additional $12.4 billion.
Of course the come back is, “you can’t put a price on financial stability”, to which I say, “Yes. You can. And we paid about $700 billion more than it is worth”.
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