Quantcast

Misused TARP Funds Shocker | The Nation

  •  

The Notion

Unfiltered takes on politics, ideas and culture from Nation editors and contributors.

Misused TARP Funds Shocker

Told to make more loans, TARP banks made fewer, gambled on the stock market and bought other banks. Will we "tell" them to go to their rooms? Or at least cut their allowance?

Just a few months ago, the Treasury Department stress tested the banks. The result was a call for massive new capital infusion -- for them, from us. 

Even then, academic studies were clear that the very same banks were making more than a buck. TARP recipients JP Morgan and Wells Fargo cut dividends to investors only once, and, well we all know what was happening at  Goldman. They were on track -- boy, were they on track -- to super-profits.

Now there's news -- from special inspector general Neil Barofsky, the overseer of the TARP bailouts.

Of 360 banks that got money through the end of January -- Barofsky reports that 110 invested at least some of it in the stock market, 52 repaid bad debts they'd taken out, and 15 used our funds to buy up other banks. And that's not even counting the millions they spent lobbying against bankruptcy reform or credit card regulation.

To make things right Barofsky's calling on the Treasury Department to require regular, detailed reporting from TARP recipients. Just in case you forgot, so far, the Treasury has refused to collect such information. In a written response, Geithner et al are still against it. "Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean. "

Oh, really? Well, that's a little different from how TARP was sold to us.

Back last fall, Hank Paulson, a former Goldman CEO, who once owned $700 million worth of the company's stock, told taxpayers that if we gave to the banks, they'd give back to us --in jobs, and loans, and new businesses on Main Street. (Even though CitiGroup were stating publicly their intention to reduce, not grow, lending.)

Opponents of healthcare are all hot and bothered about $1 trillion -- that's $1 trillion over ten years for healthcare for everybody. Most estimates put the final cost of the TARP fiasco at twice that.

 

Would we have gone for that -- any of us -- if we'd been told it was to "pour money like water into an ocean?"

A very profitable, private ocean, at that. What do you think? 

 

Before commenting, please read our Community Guidelines.