Shall we look at the books?
Neil Barofsky is the Special Inspector General (SIG) for Troubled Asset Relief Program (TARP). He is also a former prosecutor. Being a lawyer and being a prosecutor makes him someone who is going to be suspicious until innocence is proven. That, IMHO, makes him a good man for this job.
So, what’s his job? To follow the money handed to the lending institutions for lending. He has to follow the money without looking at the books. His most recent report says that 80 percent of the lending institutions say they have use the funds to support lending. Of the 364 institutional lenders surveyed, more than 100 spent on residential mortgage loans. Sixty-one more claimed to support other forms of consumer lending.
The information is not verified by a look at the books (since Mr Barofsky, our SIG, doesn’t have the authority to do so.) Banks are required to give all lending data on a monthly basis. But that’s not enough to end the questions. Mr. Barofsky wants more transparency. “The program itself and American people’s view of the program suffers when there’s this sense that the money is going into a black hole.” That’s what Barofsky told NPR yesterday.
According to the Wall Street Journal, Barofsky’s report states that “43 percent of the banks used the money to meet capital or reserve requirements set by regulators. Four percent used it to complete acquisitions, often in transactions facilitated by the Federal Deposit Insurance Corp. About a quarter reported investing in mortgage-backed securities affiliated with federal housing agencies, and 14 percent reported using the money to pay down other debt obligations.” If it is so, it still supports lending, but it doesn’t support borrowers.
What’s your take on this? Do you see tax dollars falling into a black hole? Are you for more transparency?
Out in the real world, I continue to hear that the home loan modification program excludes too many people. The complaint that I hear is that there is a tiny range between “not qualified” and “not in need of refinancing.” It’s not readily bailing out homeowners.
Is the bailout money not bailing out anyone? Is it just bailing out the lending institutions? Are you for less bailout? Are you for the bailout going to different places where it will be more effective?
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Having the feds not know where the money was going is part of what got us here. I'm not sure how you balance the confidential nature of the competitive financial services industry with the need for the public's interests to be protected.
The bailout was never really about helping homeowners. Instead, it was designed by bankers to funnel taxpayer money into propping up-- you guessed it-- insolvent banks. It's hard to say what exactly is happening since the process is intentionally opaque. But my feeling is that most of the bailout money has gone to boosting capital reserves throughout our largely insolvent banking system. In addition, some money has also been used to bail out bank bondholders and also line the pockets of bankers themselves. (That loud "sucking" sound you hear is your tax dollars moving from the US treasury to Goldman Sachs's income statement.) Wake up America... The bailout was a bait-and-switch scam from the start.
P.S. Looking forward to reading what Marcus and Hung have to say on this topic.
Most applicants for the modification program are looking for a hand out. Sorry people , there is no free lunch.
Because you took an equity loan to buy an Escalade, a boat, a 72 inch plasma tv, new furniture, put in a pool, and take a trip to Disney World , and are now underwater because of the market downturn, doesn't mean that the bank was deceptive . Just pay back the money you borrowed.
Of course we need more transparency. Problem is, if we had more transparency, and the average person actually understood the outright fraud and theft that is occurring, there would be riots in the streets.
"The last official act of any government is to loot the nation."
Lance, what's to say? Remember the Titanic, where first class nabbed all the lifeboats, and left steerage locked below decks to drown? It's sort of like that, except in this case, first class blew the hole in the hull in the first place, so they could rifle through the pockets of the third-class working folks before the ship went down. This is the greatest transfer of wealth from working Americans to the pockets of select crony capitalists since, well, the last one. That was its whole purpose, and it succeeded grandly.
It was certainly not intended to increase lending or "fix" the banking system. Yes, we need banking. No, we don't need these bankers. They should have been allowed to fail, been nationalized, and our money should have gone to recapitalize new, sound banks.
Jim, what confidential trade secrets does a bankrupt organization need to keep from the people who bailed it out? Confidentiality is just propaganda. Americans are so well trained these days, always quick to snap at any hand that would loosen their leash. Personally, I've had enough of the propaganda from the financial services industry and their lackeys in the White House and Congress, so I don't really care about any of the fake "disclosure" that Barofsky pines for. We've been well and truly gangbanged, and I'm just not interested in reviewing the timesheets for the five hours of community service to which our assailants were sentenced.
Approximately 0% of banks have increased lending. I'd guess most of the TARP money has been used to purchase T-Bills and are used as a buffer in preparation for a prolonged recession. The remaining TARP money is used by banks with a defunct business to pay current operating expenses.
Don't blame the banks, blame the politicians and bureaucrats who gave away money with no conditions.
Look at Bernanke, he's saying there should be no audit of the FED because it would compromise their independence. What independence? While the FED was set up in an ideal world to be independent, it is no such thing. The FED works for the bankers and Washington.
And the only reason why a person or business would not want to be audited is because they are trying to hide something. End of story. And yes, the FED has much to hide these days.
ABOLISH THE FED!!!!!!
spot on Lance, this was never about homeowners from day one. It was portrayed that way to provide political capital, but the bottom line is it was always about the banks. They throw a boatload of money via PACS to all the crooks in D.C. every year.
This blogger might want to review your comment before posting it.
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