Blog of Intellectual Capital

Here is a report on the real cost of the TARP program. As it seams, the plan does not always equal the result. The Power line Blog provides some stunning insights into the report submitted on April 21st. Click here to read the full article.

“On April 21, the Special Inspector General for the Troubled Asset Relief Program Act of 2009–“SIGTARP”–submitted his quarterly report to Congress on his office’s activities in relation to the TARP program. The report is a disquieting document that should be read by every American–certainly be every taxpayer.

The Inspector General’s report documents the stunning and at least partly illegal expansion of TARP from the $700 billion originally allocated by Congress to what is now a $3 trillion complex of programs. This chart shows the various programs that are now included within SIGTARP’s oversight, and how they have expanded from the initial $700 billion. Note that some of the programs are still incipient; $3 trillion is by no means a final number.”

The article continues,

“The report is valuable for a number of reasons, not least because it provides the most coherent description I’ve seen of the various programs now underway to bail out–or take over, as the case may be–the country’s financial sector. So far, the report’s most commented-upon feature is its description of the many criminal investigations that are now underway, arising out of TARP:

Both from the Hotline and from other leads, SIGTARP has initiated, to date, almost 20 preliminary and full criminal investigations. Although the details of those investigations generally will not be discussed unless and until public action is taken, the cases vary widely in subject matter and include large corporate and securities fraud matters affecting TARP investments, tax matters, insider trading, public corruption, and mortgage-modification fraud.

It is safe to assume, however, that the investigations now in progress represent not even the tip of the iceberg. The most troubling feature of the SIG’s report is its documentation of reluctance on the part of Tim Geithner’s Treasury Department to make even modest efforts to protect the interests of the taxpayers. To take just one glaring example, Treasury has refused to require banks to account for what they do with the billions of dollars they receive in TARP money:

Treasury has indicated, however, that it will not adopt SIGTARP’s recommendation that all TARP recipients be required to do the following:

• account for the use of TARP funds
• set up internal controls to comply with such accounting
• report periodically to Treasury on the results, with appropriate sworn certifications

In light of the fact that the American taxpayer has been asked to fund this extraordinary effort to stabilize the financial system, it is not unreasonable that the public be told how those funds have been used by TARP recipients. Treasury is now conducting regular surveys of the banks’ lending activities; however, with the exception of Citigroup and Bank of America, Treasury has refused to seek further details on TARP recipients’ use of funds.”

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