Comments on: Barofsky Report: What Happened to All That TARP Money?

By: bobschacht

bobschacht — Sat, 25 Jul 2009 06:29:01 +0000

One of the worst things, IMHO, is that the big banks used TARP funds to get bigger, by buying up smaller banks. That was NOT the intended purpose.

Bob in HI

By: Hugh

Hugh — Sat, 25 Jul 2009 03:33:41 +0000

I would say that the TARP was mostly about PR. About 15 minutes after it was enacted Paulson knew his reverse auction for toxic assets was a non-starter. The loans were a convenient fallback. Their raison d’être was to free up credit markets and shore up banks. They obviously didn’t do the first and in my previous comment I noted they didn’t do the second. It is the very large programs that we don’t hear too much about plus the accounting changes plus the government refusing to move against the really big insolvent banks that has led to the current respite. But it is important to remember none of the fundamental problems were resolved or even touched. So the prognosis remains what it always was: best case, Japanification of the economy for the next decade, worst case, a very bad depression. The math to me still favors depression.

By: Hugh

Hugh — Sat, 25 Jul 2009 03:25:22 +0000

You should be able to track into which accounts at the banks the money went but money is fungible. So where it went could have freed up money to go somewhere else and do something else. For this reason, you really do need to know more generally what the banks were doing. Now we know that banks have only been doing some selective lending. It isn’t much of a stretch to come up with Barofsky’s list.

But there is a lot more to the story. For example, what were the banks doing with the credit lines they had to the Fed and Treasury, in particular the FDIC? Also you have to keep in mind that banks have been allowed to overvalue their assets and write down their debt. It was these things that saved “the banksters from abject failure.” The TARP money, especially for the big banks, was just an add-on and something of a cover to distract from all of these other things that were being done.

By: Valley Girl

Valley Girl — Sat, 25 Jul 2009 01:36:26 +0000

masaccio- okay, I need help. What is your “take home message” here? TARP was a good thing? TARP was not a good thing?

By: goldstandard

goldstandard — Sat, 25 Jul 2009 01:31:49 +0000

At the House hearings today, the names of those companies that we will never see a return from were addressed. AIG 180 billion. Citi 45 billion. The car companies 50 billion and counting. 17 trillion in bad private as well as commercial real estate debt that will have to be sold for pennies on the dollar and the list goes on. All the Fed has done is monitize this debt and privatize the losses with the bill going to the US tax payer. And you wonder why the Fed won’t tell us where the money went? When you take into account the total of the bailout funds to banks and others as well as our unfunded liabilities such as SS, Medicare and Medicaid, the US is currently in a hole for over 65 trillion dollars.

By: PPDCUS

PPDCUS — Sat, 25 Jul 2009 01:23:03 +0000

Maybe the financial elites knew that at the time and were just saying what they thought might help them get government money.

Well, of course they did. And the lying continues …

By: goldstandard

goldstandard — Sat, 25 Jul 2009 01:23:02 +0000

He lost his position on CNBC as one of the rising stars in financial land because he wasn’t afraid to speak truth to power. Today on his new show over at MSNBC Dylan Ratigan let lose with the help of Eliot Spitzer. This is the best answer as to where the TARP funds have gone and why both the Federal Reserve as well as the Obama administration don’t want you to know where the money has gone.

http://www.huffingtonpost.com/.....44617.html

By: masaccio

masaccio — Sat, 25 Jul 2009 01:17:42 +0000

I am not suggesting that we could borrow our way out of problems. Far from it. However, many of our businesses depend on availability of credit to stay open. The justification for TARP was that it would increase availability of credit, which was necessary to keep the economy from collapsing.

Banks did not lend, and many small businesses were hurt by sudden demands for repayment, refusal to renew lines of credit, and increased fees and interest. This and others of my posts are meant to show that the stated justification for TARP programs is false.

I think that Paulson and Bernanke meant what they said about the need for credit, and I think it was mostly true. I also think that the banksters were lying, and that they fully intended to use the money to stay alive with no thought to the needs of the broader economy.

I think the lack of credit to businesses is a serious problem even today.

By: Funnydiva2002

Funnydiva2002 — Sat, 25 Jul 2009 00:39:51 +0000

Hey, we don’t call ‘em Bunch of A**Holes for nothing!
FWDiva

By: PJEvans

PJEvans — Sat, 25 Jul 2009 00:38:45 +0000

You would think that a bank would have better controls on its investments, loans, and spending. But then, this is BofA ….