Posted on 07/28/2009 2:26:27 AM PDT by FromLori
At the heart of the clash between TARP watchdog Neil Barofsky and his critics in the Obama administration is that Barofsky thinks that the bailout should be publicly accountable for meeting its public goal: Keeping banks lending money to fuel the economy.
The Treasury Department, meanwhile, is happy with the secret goal--recapitalizing banks and consolidating weak banks with stronger ones.
This dichotomy is vividly portrayed in this essay by Glen Greenwald:
Barofsky wants to compel banks to account for those [TARP] funds and then publicize that information, while the administration opposes such efforts, claiming that accounting for TARP monies is impossible due to the "fungibility" of those funds. To disprove that claim, Barofsky sent out voluntary surveys to the bank which proved that those funds could be tracked (and he found TARP funds were being used by receiving banks largely to acquire other institutions and/or create "capital cushions" rather than increase lending activity, the principal justification for TARP).
Now it's been obvious to many of us for quite some time that financially unhealthy banks would never use the TARP money for anything but hoarding, paying bonuses and trying to prop themselves up. But that's because we're as cynical as the architects of the TARP. Barofsky, a career prosecutor, takes the entirely reasonable view that government programs shouldn't be based on lies.
On a deeper level, what Barofsky is running into is a core problem with the way the TARP was designed. There's simply no way the government could use capital injections to spur lending into a recessionary economy. It was bound to be used to increase capital cushions. And that's because the Treasury Department and the Federal Reserve simply lacked the political imagination to find a way to shore up the financial system without propping up zombie banks.
(Excerpt) Read more at businessinsider.com ...
TARP money is imagined, future money. Banks take it. Then they can purchase treasuries. Then they can use those treasuries as reserves. And we all know what banks do with reserves.
This is related too
http://www.businessinsider.com/how-to-think-about-the-tarp-bait-and-switch-2009-7
I just don’t see keeping the system afloat as being antithetical with keeping banks lending. Can’t have one without the other.
Wow, what a moron. What was nearly everyone in the country saying for the past year?
Not so fast. Barofsky is an IG. When he says TARP is a fraud, it carries some real weight. That’s not something he can say quickly or casually, and the fact that he’s saying it at all is pretty significant. From what I’ve seen, Barofsky is one of the more significant thorns in Obama’s side right now.
What weight? Can he magically force the banks that took this money to pay it all back, with interest? If TARP is a indeed a fraud, then those who partook of the fraud should be made to reimburse the taxpayers for said fraud. Unless this guy can do that, then his opinion doesn't mean anything, and I will continue to evaluate in the "duh" context that I framed earlier.
>Barofsky, a career prosecutor, takes the entirely reasonable view that government programs shouldn’t be based on lies.
Unfortunately it seems “reasonable” ISN’T a descriptor you’d attach to Government...
It wasn’t a bailout, it was a power grab, and as such was a resounding success.
TARP was the typical Democrat response to any problem...just throw money on the problem and in the process enrich friends, buy influence and assure their own re-election.
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