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Remember the TARP Money? Yeah, It’s Gone.

By: Leon H. Wolf (Diary)  |  October 21st, 2009 at 01:39 PM  | 

RESIZE: AAA

Via USA Today, TARP IG Neil Barofsky has some harsh words for the way the TARP funds have been handled:

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.

“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.

***

“We don’t even know where the money went,” says Rep. Daniel Lipinski, D-Ill., who recently called for TARP assistance to end in December, when it’s set to expire. The Treasury has the authority to extend the program until next October.

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.”

I counted myself among the supporters of TARP as it was described and sold to the public; i.e., as a program whereby the government would purchase troubled assets that were causing liquidity problems that threatened economic stability.  Neither I nor anyone else I have ever met supported the way TARP has been implemented; as a massive slush fund boondoggle for corporations favored by the White House.  And now, mere months after throwing all this money around, the oversight body for the program is frankly admitting that we’re never going to see most of this money ever again (but in exchange, we did buy government control over Corvette production!). What a crock.

Democrats in Congress have a chance to end Geithner’s reckless control over billions of dollars of taxpayer money, but they must act fast.  My guess is that they’ll be too busy trying to give the Obama administration control over trillions more taxpayer dollars through his healthcare plan to even try.

COMMENTS

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  • http://www.WILLisms.com WILLisms

    Senator Kay Bailey Hutchison said the day before the TARP that she thought it would be a low cost, no cost, or even a positive for taxpayers:

    http://www.willisms.com/archives/2009/10/trivia_tidbit_o_678.html

    Oops.

  • crosley

    It should be common sense for conservatives that once the government writes a checks, it’s NEVER going to see that money again. Ever.

    Republicans thought they could just use TARP as a patch for the economy until McCain won the election, then figure it out from there. Instead, it ended up giving Obama and the Democrats a $1 trillion dollar blank check with essentially zero oversight.

    Had McCain gone against TARP, I think both he and the Republican Party in general would have done much better in the 2008 election. The polls showed that about 3/4ths of the public were against it because they knew exactly what it was, a giant sop to Wall Street.

    • http://impudent.blognation.us/blog kyle8

      I agree they screwed up but only because they agreed to something that was way too big. Tarp was at least three times bigger than it needed to be.

      However, I am convinced that it saved us from a complete financial meltdown. That meltdown might still happen, but it was put off for a while at least.

      Don’t confuse the first Tarp with Tarp 2 or with the stimulus bill. Tarp one was pure last minute desperation.

      • crosley

        I’ll just have to respectfully disagree.

        I look at all the carnage since TARP was passed, and I really don’t think it solved much of anything except as a handout to the financial companies that had the best lobbyists. It might have kicked the can down the road, but if anything it just prolonged the pain.

        Capitalism always finds a way, and I think America would have been in much better shape to have let the crisis unfold rather than becoming a “bailout nation.”

        • http://impudent.blognation.us/blog kyle8

          I agree, but what we have, and what we had last year was a far cry from unfettered capitalism. Let’s face it we haven’t had anything like true capitalism since the 1920′s. So whereas the government created a problem they were right to try and alleviate it.

          I really do think we would be in a world of hurt had they done nothing, of course I cannot prove a negative.

          • AceInTX

            The question has always been should the government be up to it’s shoulder blades in the economy and by what authority do they get involved at all?

            What’s really starting ro frost my britches right now is that we no longer even discuss the FACT that government caused the frigging crisis in the first place…FANNIE MAE and FREDDIE MAC were both in trouble because the government forced them to give loans to disadvantaged people who couldn’t afford it…but instead of standing by the truth…our so called leaders went off in a manic and threw the Constitution to the wind all the while telling us we’d get our money back and make a healthy profit and all go skipping along the bunny trail after it’s all over…

            YET here we are!

            Here’s another one for you…The medical system in this country is where it is because Medicare and Medicaid force doctors to take less compensation for their services than it costs to provide it so the doctors charge the rest of us more to cover the difference…ditto insurance companies…of course…now…having caused the problem in the system to begin with they’re out there ready to take control of the whole system and our so called leaders in the Republican Party start every discussion about HCR with the obligatory statement, “everyone agrees we can’t end this year without passing something…but”…

            thus seeding the argument…

            I’t high time we embraced the “NO”…and the “Party of NO”…because sometimes “NO” is the right answer!

          • AceInTX
          • http://impudent.blognation.us/blog kyle8

            we would be very lucky if we could just hold on the the little bit of free enterprise we have now, but I fear that worse things are in store.

          • http://climbingtherubicon.blogspot.com towerclimber

            Kyle, you’re right..we could be lucky.

            I could be lucky not to get raped if I don’t resist.

            My children would be lucky to get an education if they didn’t go to school..

            I have to say that this sort of attitude will never win freedom or restore the liberties taken from us.

            I don’t mean to berate you. Honestly!

            I do have to ask though..and each and every one of you!!

            WHAT IS YOUR FREEDOM WORTH?

            The phrase I hear now is “populist views”
            that’s a catch phrase for politicians and twitterheads to speak about bluecollar folks..or folks who require respect in both words and deeds, from others and have no compunction about getting it one way or another.
            that’s something politicians and well to do folks have forgotten about. They don’t consort with us blue collar types because they know that we’ll remind them, quick fast and in a hurry, so we’re marginalized. Yet its folks like you and I that allow this country to grow and give it the modicum of respect that it’s managed to hold on to.
            Keep in mind that if a person has no reason to fear you, he also has no reason to respect you…and respect is the underlying quality that makes business work. Admiration only works when folks actually know and like each other…I don’t see too much of that in Washington right now.

            so. after that long winded response to your post I have to say, grow a spine.
            FIGHT by God…fight for what is YOURS! God gave it to ya you idiot! the bitches in Washington didn’t give you one damned thing.
            Speak up about things..and if that isn’t working then advocate armed rebellion.
            It’s a proven system. If you don’t believe that, ask our forefathers.

          • The_Gadfly

            It wasn’t just Fannie and Freddie they forced to make bad loans, it was the whole fricking banking industry. A loaded study about redlining resulted in new regs requiring banks to loan to people who shouldn’t get money and provided a protection clause if the banks donated money to ACORN.

            Other than that you’re pretty much on target. I disagree somewhat about the full spectrum remedy to the problem. I think that because the government created the problem, it also has the responsibility to buy up most of the bad loans. Of course, that should only be done AFTER they fix the problem of forcing banks to make the bad loans. Yeah I know that still leaves taxpayers getting stuck with the bill, I just don’t see a way around it. I’d like to be able to recover at least some of the money from Rahm, Barney, Charlie and the rest of the gang, but we don’t seem to have the legal mechanisms to do so.

      • Dan McLaughlin

        Yeah, like Leon I supported the original Paulson TARP plan because it looked like a fairly simple idea that was needed to stave off something worse. And we can’t know what would have happened without it. But there is certainly a case to be made that we should have expected TARP to be handled completely differently than how it was sold.

        • AceInTX

          But there is certainly a case to be made that we should have expected TARP to be handled completely differently than how it was sold.

          I’m a cynic…I know…I would argue it was inevitable!

  • clement

    It was never intended for the tax payers to really get their money back, as “we” only start to get our money back once the 800 billion refills the bailout slush fund (only at the 1.6 trillion mark do we break even).

    It was obvious the AIG money was a total waste when it became clear they were just a money laundering operation for the govt.

  • http://www.bearcreekledger.com toni100

    and I took a lot of heat for it. Giving bureaucrats unfettered access to $700 billion brings nothing but corruption. I just never bought the line that disaster lurked if this wasn’t done asap. The powers this bill gave to the Treasury Secretary was the biggest red flag that should have made everyone run screaming from this bill. Power like this is an invitation for corruption. I never did care for Paulson so that was also influencing my stand. The other issue was that Bush seemed to have just given up on maintaining any semblance of fighting for the free market and the country’s financial stability. He had given up and given in to the Democrats and that incredible financial mind of John McCain.

  • http://www.theminorityreportblog.com/blog/loren_heal Socrates

    I was against the TARP when it was proposed, and have opposed it at every step. The economy should have been allowed to tank, no matter what.

    If anyone calls me “irresponsible” for declaring the government should stay out of the economy, period, I have several immediate responses.

    First, I believe “irresponsible” is among the mildest adjectives I would use to describe the current state of affairs.

    Secondly, and at least tangentially related, there is no way to be responsible borrowing to buy assets regarded as “toxic”.

    And if still you call me irresponsible, I yield to my initial temptation to call you a socialist, and we’re even.

    • Andy W.

      and one more 5.

      I was against TARP before I was against it.

  • AceInTX

    when they said we’d make money from the “investment”?

    Color me shocked…Shocked I tell you!

    • http://www.hakubi.us/ Neil Stevens

      You riding in on an opportunity to show your blind inability to distinguish Republicans and Democrats.

      • http://impudent.blognation.us/blog kyle8

        when they so often sound and act exactly alike?

      • AceInTX
        • AceInTX

          I’ll be able to tell the Republicans from the Democrats when they decide to stop acting like the Democrats…

          from there I ask you drop it because I’m unarmed against your “Status”

      • http://slcliberty.blogivists.com randy streu

        Seriously. I understand we need to help the Party, but let’s not turn a blind eye to the career politicians purporting to be on our side, who let us down.

        • AceInTX
        • Hooah_Mac

          Was what allowed President Obama to credibly convince a good portion of the country that he and his party were the ones who would keep taxes low and shrink the deficit.

          Vitriol against the Republican party in general doesn’t help us, but we are well served to act against the R’s that muddy our message and betray our principles. If 2008 taught anyone anything, that should be it.

          • Richard Mullins

            then you’re either naive,stupid or a combination of both. Really, this was done on a year that was super politicized and those Reps were in a Catch 22. There were some problems, but voting Yea or Ney wasn’t going to make a real difference, except for cheap trick Dems and others that just to be in the “In” crowd.

          • AceInTX

            If Republicans in power had been principled they’d have never bought into the panic that brought us tarp….the principle that handing one person three quarters of a trillion dollars to doll out as he sees fit was going to lead to corruption and a total lack of credibility is a principled concept based human nature, and history…and here we are…the money is gone…no one knows where it went…and everyone is shocked that it can’t be accounted for and the promises that we’d be paid back with interest is being exposed as the unrealistic pipe dream that it was from the very beginning…

            But hey…Bush was a Republican…and we JUST HAVE TO DO SOMETHING BECAUSE THE SKY IS FALLING and we’ll get the money back some day won out over the common sense principle

            and I’m disloyal and a trouble maker for pointing out the obvious according to some people…go figure!

          • Richard Mullins

            but since TARP was voted on in 2008, then it was a political hot potato. Yes, we shouldn’t hand out money like it’s water but that wasn’t even the point here. The point was we should do and what we do to stay in office is two different things. Really, you should think about it. BTW, don’t even try to put words in my mouth, because I’m sure I’ll come over and shove them down your thought.

          • Hooah_Mac

            Is never a long term winning formula. That is my point. Sooner or later that bites you in the you know what.

            That is what the Republicans did wrong. For a decade they told us that winning elections was necessary to do the right thing. Turns out, they stopped losing elections anyway, and the right thing never got done.

          • Hooah_Mac

            They stopped winning elections anyway

          • AceInTX

            but putting that foolishness aside and in the interests of honest debate…I see your point…but I stand by what I said…had we stood on principle then…we’d have a much stronger hand now to run as the party of limited government against an over reaching and extremist party bent on subjugating our liberties….but as it is…we have a long hard slog ahead of us to reclaim that mantle and to rebuild our trust with people who are looking for an alternative to the ObamaDems…

            To top it off…I don’t know what we gained by having our standard bearer and the rest of our party vote for it. McCain lost, we lost total power in Washington…and now the Money is gone and we have no way to account for it…or get it back…the worse thing about it is…a Republican President followed by a majority of Senate and Congressional Republicans authorized the expenditures…and it was a Democrat President who directed where the funds went which served to strengthen the hand of his allies and minions.

          • AceInTX
        • http://climbingtherubicon.blogspot.com towerclimber

          help the party?!?!?

          help the party that decided to ignore their constituents?

          Help the very party that decided to advocate less liberty and self government?

          I say cut away the cancer and send them on their way. if they continue to fail, get rid of them…JUST like we should have done with GM.

      • http://climbingtherubicon.blogspot.com towerclimber

        If it looks like a crook, talks like a crook, you can bet your educated ass that it’s a crook.

        The republican party has been corrupted. if they were clean as the driven snow you wouldn’t see republican names on the kick back sheet for fanny mae and freddy mac.

        as it is? they’re as pure as Chicago snow…Just like the rest of em in the beltway.

        • gailmarie

          You see, Mr Hope and No Change left,, Obama…. Trying with all his might to Bankrupt America has awaken a lot of folks.. They are seeing our Constitutional Freedoms pushed aside, they are reading and quoting the Constitution….Like Mr Towerclimer quotes Alexander Hamilton, as in my subject line. I too see the Rats in Congress. So whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it. It is our duty to throw off such Government. We the People are awake and 2012 they will be done playing with our unalienable God Given Rights. But we must not rush to arms just yet my friends?We must stand together United and take back our Government with a new group of REFORMERS: OF the People, BY the People, and REALLY for the People. Join a Teaparty.com stay on top of the lies and lets flip the house in 2012 WE CAN DO IT !!! I thank God for Freedom in America and will do all I can to keep it. Bless you for your Passion.

  • TokyoNose

    …what exactly are you saying?

    Impatience, outright laziness and a weak stomach argue against my digging up and reading the actual report, but based only upon the quotes in the post (excerpted and paraphrased, presumably, by USA Today, and sufficient, I think, for the purposes of this argument) I have to wonder about the weak language chosen by the appointed “watchdog”.

    We are informed that: “…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.?

    Assuming that he has not been taken out of context, how does this mean that: ?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,?

    “Belief”? Those crazy American people, coming to these ridiculous conclusions- that huge chunks of the money are gone, unrecoverable- when it would appear that the whole point of his report is to tell us just that.

    It’s early here in Tokyo, I’m cranky and even more cynical than usual (which is saying a lot), but to me it seems that “The American people’s belief [read: knowledge as confirmed by your report] that the funds went into a black hole etc., is one of the BEST outcomes of this program, along with the well-deserved “…reputational damage to the government.”

    I should make clear that I don’t think that the money having gone down “a black hole” is a good thing, and this is why I am confused by Mr.B’s language. If he is telling us that massive chunks of money are unrecoverable, and that taxpayers were mislead into believing that there would be greater accountability expected of both those disbursing the money and the recipients, then absolutely, the program has been a debacle. But don’t dare to blame the taxpayers for catching on to this and rightfully questioning the motives and competence of their government.

  • gator_hoo

    that the Democrats will magically “find” where the money went when they are funding their campaigns

  • harlan

    Is this a joke?

    I don’t just find the government lacking in credibility. In a few short years I have grown to HATE the goddam politicians, who in fact ARE the government.

    They are incorrigibly corrupt and self-serving. They need to go.

    And the RNC, who should be above contempt (according to their charter), continue to illustrate that even the “good guys” are untrustworthy, (and don’t know their ass from a hole in the ground).

    • http://climbingtherubicon.blogspot.com towerclimber

      So many times I’ve watched a vote happen only to look it up, read the legislation and then find that my congressman has voted for it.
      sometimes I can think to myself “well..he may have made a give and take kind of deal for something more important”..but all to often I’ve found myself thinking what in hell was he thinking?
      For those of you who care to defend the RNC on this matter, I would have to advise against it. You’ll get embarrassed.
      How can you defend Mark Sanford finding his “soul mate”?? the ass is already married!
      there’s your credibility. that and a couple hundred other decisions made by the RNC (supporting Dede Scofazza ring a bell?)

      yep..they’re corrupt.

      Writers Should write…but don’t tell anyone and wash your hands afterwards.

  • RedInABleuState
    • gailmarie

      You see, Mr Hope and No Change left Obama…. Trying with all his might to Bankrupt America has awaken a lot of folks.. They are seeing our Constitutional Freedoms pushed aside, they are reading and quoting the Constitution…. I too see the Rats in Congress. So whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it. It is our duty to throw off such Government. We the People are awake and 2012 they will be done playing with our unalienable God Given Rights. But we must not rush to arms just yet my friends?We must stand together United and take back our Government with a new group of REFORMERS: OF the People, BY the People, and REALLY for the People. Join a Teaparty.com stay on top of the lies and lets flip the house in 2012 WE CAN DO IT !!!

      Thank God for Freedom in America and will do all I can to keep it. Thanks for your passion.

  • http://climbingtherubicon.blogspot.com towerclimber

    Folks, I know that some of you know “all about finance” and as such, saw tarp as a way to stave off something worse.
    Your lesser educated countrymen were saying “it’s a bad idea”.
    Even politicians dismissed them because “they don’t know about finance.”
    nope..I can’t claim to know much more than how to balance my checkbook and work like an ass to put money into my accounts.

    But I CAN say that I know a thief when I see one. I can also say with NO worries about being wrong that the next time you think you know what you’re doing and want to commit to that kind of thing, back up and take a look at the character of the folks who are asking for the money.

    All of your lesser educated countrymen did just that and got up in arms about what was going on. perhaps next time, instead of using all that wonderful knowledge that you gained in school, listen to the folks who have less education and are forced to deal with (and sometimes I mean that litterally) thieves and liars.
    We might not be as educated, but it doesn’t take that much education to know a rat when you see one.

    • skorrent1

      Was demonstrated almost immediately when the funds that were needed “urgently” to prevent financial collapse by buying “troubled assets” were held for months by Paulsen while he decided that maybe buying “troubled companies” was a better idea. Then he left most of the money to BO to decide who to buy. When they went to Congress in September they had no idea what to do, they just wanted a lot of money to do it with! And yes, Paulsen, Bernanke and Bush snookered a lot of Republicans at the time.

    • Alberta
  • revivefederalism

    * Congressional Redistribution of American Prosperity

    In order for TARP to have met its goals of helping to support financial institutions that held troubled assets, it was fundamentally necessary for the government to overpay for them. If they’d only paid the fair market price, that wouldn’t have kept banks solvent. Consider for a moment the sheer magnitude of $700,000,000,000. That’s 7000 purchases of $100,000,000 each. That’s 7000 instances in which a bureaucrat who overpaid for an asset by an additional 1%, beyond what they were charged to overpay anyway, would be giving the seller an extra $1,000,000. For an extra million bucks, a lot of these companies would tacitly make job offers for a few hundred thousand a year after the ban on the revolving door lapses. The beautiful thing is that detecting this would be very hard since TARP is fundamentally designed to overpay for assets and there were no hard and fast rules laid out by Congress about the percentage overpayment allowed for each asset class. Sifting through the value of these securities after the fact and trying to make any allegations stick will be nearly impossible.

  • fayers

    Just think if you had as much money comming every day in mail as the Government how easy it would be to spend. It’s always easy to spend some one else’s money.

    Fred, Nashville, N.C.

  • idealjoe

    anyway you cut it , it still comes out the same. Bottom line………..we were asleep at the wheel when we sent that last group of to Washington. They failed us miserably. I personally don’t feel that any of that group has earned another shot at the American taxpayer’s pocket book. Not only that but they failed to understand that most Americans are patriots and we love our country. We don’t love gutless politicians who almost trip over themselves trying to cross the isle and support the other party. Maybe McCain will switch parties likes jumpin Jim Jeffers.
    Anyway I think I will use my vote this year to impose my own personal term limits. I’ll sleep better!By the way, guns and ammunition are flying off the shelves like never before. Go figure…………..