TARP Inspector General Signals Concern
by: George Warren
Neil Barofsky, the man President George W Bush named in 2008 to be the Inspector General overseeing the Troubled Asset Relief Plan, has submitted a report critical of the Treasury Department in their handling of the funds.
According to Barofsky, under the worst of circumstances, the US taxpayer is on the hook for a maximum exposure of $24 trillion, or $80,000 per person in the nation. Admittedly, this means the loss if every covered mortgage payer defaults, and the government can recover nothing on their property.
Neither does it take into account the fact that the government requires some collateral for some loans. But, when you consider our annual national production is only about $14 trillion, you can see his reason for concern.
On the positive side, since most of the strongest financial concerns have returned their loans in order to escape any supervision over exploding bonus amounts, the $4.7 trillion committed to them has declined to about $3 trillion.
Barofsky aims the most of his criticism at the Treasury Department, now headed by former Fed official Timothy Geithner. He says Treasury has accepted some of his recommendations for more accountability; but has not taken steps to require all TARP recipients to disclose their actual use of those funds.
He also criticized Treasury for not disclosing the values of its investments in financial institutions, disclosed the identity of borrowers allowed to borrow under a non-recourse loan program, and disclose the trading activity taking place under the new Public-Private Investment. Fund (PPIF) established to buy and sell those toxic mortgage assets.
In simple words, we are not being told what those financial institutions who received financial assistance are doing with the money. Barofsky’s conclusions are contained in a quarterly report to Congress and in his testimony before them Tuesday.
Perhaps President Obama, who promised the ultimate in government transparency to us, should intervene to see that we get it.