TARP Report

I don’t have the time (the inclination, really) to read all 200+ pages of Inspector Tarp’s report to Congress, but this doesn’t sound particularly encouraging – not after we’ve dumped $700 billion down this rathole.

Many of TARP’s stated goals, however, have simply not been met. Despite the fact that the explicit goal of the Capital Purchase Program (“CPP”) was to increase financing to U.S. businesses and consumers, lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending — announced in March 2009 — has still not been implemented by Treasury. Notwithstanding the fact that preserving homeownership and promoting jobs were explicit purposes of the Emergency Economic Stabilization Act of 2008 (“EESA”), the statute that created TARP, nearly 16 months later, home foreclosures remain at record levels, the TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation. Whether these goals can effectively be met through existing TARP programs is very much an open question at this time. And to the extent that the Government had leverage through its status as a significant preferred shareholder to influence the largest TARP recipients to carry out such policy goals, it was lost with their exit from TARP.


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2 responses to “TARP Report

  1. shoeless

    Rather than alotting 700billion to bloated, banks with toxic assets, the purpose of TARP was to promote lending. My proposal in 2008 was to take the money and set up 10 new, well-capitalized regional banks (i.e. Good banks) with reasonable (12:1) leverage limits while letting the others’ (bad banks) debt and equity investors suck wind for poor investment decisions.

    Would have resulted in about 8.5 trillion in available lending capital, instead of banksters pocketing the money through prop trading and cheap borrowing from Uncle Sugar.

  2. Arouet

    Love it shoeless—-sounds sorta like Canada.