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| Economy |
| Bailout cop: TARP's not working |
| 2010-02-02 |
| The watchdog charged with monitoring the government's $700 billion bailout unleashed one of his harshest criticisms of the program to date, questioning its overall effectiveness. The wheels on the bus go 'round and 'round . . . . In his latest quarterly report to Congress, special inspector general Neil Barofsky said that the Troubled Asset Relief Program, or TARP, has failed to boost bank lending as well as halt the spread of foreclosures -- two key aims of the "Whether these goals can effectively be met through existing TARP programs is very much an open question at this time," Barofsky said in the report. Open question? Hardly. But do go on. When Congress enacted TARP, the hope was that injecting capital into hundreds of banks would spur lending and keep the economy from spiraling even deeper into recession. But since then, lending to both consumers and businesses has continued to decline. Earlier this month, the Treasury Department reported that the 22 banks that got the most aid from the government's various bailout programs have cut their small business loan balances by $12.5 billion since April. The Obama administration did propose a joint program between the Treasury Department and the Small Business Administration in October to make capital cheaper for community banks that commit to increasing their small business lending. Three months later however, the government is still drafting guidelines for that initiative. Diddle diddle diddle! Barofsky, whose office has been closely tracking the evolution of TARP, also criticized the Obama administration's Home Affordable Modification Program. Even as Treasury allocated $35.5 billion towards that foreclosure-prevention program as of the end of last year, only 66,500 homeowners have received permanent modifications, with another 787,200 homeowners in trial modifications. Under fire for the low number of people receiving long-term help, the Treasury Department in late November ramped up pressure on servicers to convert borrowers to permanent modifications. Still, there is no sign that the rate of foreclosures is slowing down anytime soon. Earlier this month, RealtyTrac, the online marketer of foreclosed homes, reported that foreclosure filings surged to a record 3 million in 2009, up 21% from 2008. No jobs, the bottom is still falling out from under the housing market, the probability that houses won't regain value for anther decade, and lenders are making the process feel like they are giving you a shot in the dark in exchange for a bunch of paperwork vs. just giving them back their house and telling them to go fuc& themselves after they screwed up the housing market. Hmm. Let me think. There was at least one bit of good news from Barofsky's latest report however. He acknowledged that while the ultimate cost will still be "substantial" for American taxpayers, it will be less than originally estimated. That's quite some back-handed good news there, Barofsky. How 'bout you call it what it really is: The least-bad news. In December, the White House echoed those sentiments after it lowered its projections for the ultimate cost of TARP from $341 billion to $141 billion, as banks have raced to repay government aid. Embattled lenders Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) returned a combined $65 billion to government coffers in December. However, the American public is still expected to incur a massive loss in the end -- the question is just how much it will be. A separate estimate issued earlier this year by the Congressional Budget Office warned that TARP will ultimately cost taxpayers approximately $159 billion. So what's the other $600B for? Pork projects and healthcare, possibly? |
| Posted by:gorb |
| #1 There was at least one bit of good news from Barofsky's latest report however. He acknowledged that while the ultimate cost will still be "substantial" for American taxpayers, it will be less than originally estimated. What was that exactly, involuntary servitude to the state for three generations? /rhet question |
| Posted by: Procopius2k 2010-02-02 15:23 |