Free Markets, Free People

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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11 Responses to TARP Report – “We don’t even know where the money went”

  • Well time for FoxNews to do another story on the Auto bailout.

  • this is all sort of besides the point. I certainly never expected to see that money again. The fact as I see it was that Tarp one was necessary. Well, not the size of it, it was about three times too big. But everything I have read from my most trusted finance guys is that we were facing an imminent and complete meltdown of the entire financial system.

    Tarp averted that, (or perhaps only postponed it) but, like I said we only needed about 1/3rd of that to do the trick. The point being that I make many more allowances for actions during an emergency.

    However, the stimulus bill was completely unnecessary and indeed counter productive.

    • That’s what they claim, Kyle – but to this point, no one has told us what “complete meltdown of the entire financial system” meant.

      That alone is enough to be very skeptical that anything was needed.

    • The TARP money was to buy up the toxic mortgages and get them off the companies books. As MCQ said, after they passed it the plan changed daily and those toxic mortgages were never taken care of. They are still there. The companies have just repackaged them in with the good ones again which is what got us into trouble in the first place.

  • “We don’t even know where the money went” .. You’ve got to be kidding.

    This is the most transparent Congress and administration … ever.

    They know .. so “Turbe” Timmy, Obama, Rahm, Axel Foley, Pelosi and Reid in a chair under guard and waterboard them until they reveal the secret mayonnaise jar that contains this $700 Billion.

  • I knew it was going to be a slush fund, and said as much, but I must confess I didn’t expect it to be a secret slush fund.

    • It was pretty obvious that whatever “plan” they had for the money changed by the week, almost the day. That doesn’t at all impress me with the fact that they had any idea of what the problem was (if there was one) and how to fix it. So I see it as pretty hard, then, to claim credit for something for which they had no plan other than “throw money at it!”

  • I’ve stopped being surprised.

    I rail against TAO and the democrats, but the fact of the matter is that we’ve got a pretty sorry lot of “elites” running the country, and that includes Republicans. Let’s keep one thing clear: the only reason that the GOP voted against TARP and the omnibus and (so far) against health care takeover is that the dems were spending just a little too much. As somebody else wrote here (can’t remember who or I’d credit him), the dems and the GOP are like a pair of drunks fighting over the wheel of a car careening toward a cliff. Neither one of them are trying stop it; they’re just fighting over turning a little one way or another.


    How much money does our country owe again? And how in the world will we ever pay it back???

  • is one of the worst outcomes of this program, and that is the reputational damage to the government

    And we all know how the government values and protects its reputation.

  • Anyone care to guess what percentage of TARP funding ended up in anonymous numbered bank accounts in the Grand Cayman Islands, Hong Kong or Abu Dhabi?