Treasury's Titillation over TARP and budget increase
Thursday, March 31, 2011 at 11:26AM The Treasury department spends an awful lot of PR time extolling the success of the TARP program (and never mentioning any of the other myriad of bank subsidies and guarantees provided outside the realm of Congressional approval that rendered the $700 billion program a small percentage of the financial aid package to Wall Street or a peep about the $4.1 trillion of debt it issued since the fall of 2008, $ 1 trillion of which rotated through banks and into historically high excess reserves at the Fed).
Good for them. Today, Geithner spewed another projectile of self-pride over the $24 billion profit we taxpayers are gonna reap from his stellar investment in reckless banks and risky assets. This silenced the critics, as one commentary pointed out. Sure, cutting us a check wasn't the point - I mean, if it was successful betting he was going for, the $700 billion of TARP money put into say, silver , would have bagged us $2.1 trillion.
But, TARP only appears to have worked if you ignore the shell-game that surrounded it. Without the amount of collective federal support, including the lavishing of guarantees, toxic asset purchases that remain on federal books, the abolition of accounting requirements that would force banks to reveal the real risk in their existing loan portfolios, the cheapening of money to historically low levels by the Fed's QEX efforts, and the very notion that the Treasury department was the banks' financial cushion, banks would have not been able to repay the isolated TARP handouts with interest. They wouldn't have had the money from other avenues to use. It's meaningless to consider this a savior type of economic strategy. Aside from which, the CBO tallied the budget cost of TARP at $25 billion, so at best, the shell-game paused at a wash.
On a separate note, if TARP was so successful, why is Geithner requesting a 14.2% budget increase for the Office of Inspector General. It may be small potatoes after his $24 billion windfall to quibble over a $5 million dollar hike, but given the noise about the program winding down in this time of budget banter in Washington, and unless the next SIGTARP stepping into Neil Barofsky's shoes is getting a $5 million raise,it seems excessive. Just saying.
Geithner, TARP, Treasury Department 
Reader Comments (4)
Just so I have this straight. The tax payers received $24B in "profit" from institutions that used TARP as the result of an effort to head off systemic risk to the nation's economy without our leaders requiring those same institutions to help head off systemic risk to its citizens.
Yet, I wonder how much the TARP recipients profited from their investments in treasuries using not only TARP but all of the goodies the government gave to them. Of course, we'll never be able to tax those "profits" because the system is broken beyond belief.
Jerry - yes, you got it right. As to how much TARP recipients profited from other investments, whether with TARP or other funds, it is hard to determine. Bank reporting would have to be far more detailed and transparent than it ever will be to determine.
What a joke, equivalent to Bernanke crowing over the record amount of dollars remited back to the US Treasury, most of which is coming from the $1T, and growing, QE2 US Bonds purchased.
Tweedle Dee and Tweedle Dumb. Hmm, retire Bernake and then appoint Timmy as the Chairman of the FED -----
Then END the FED.
That would be a good start.
yes