The 2012 Tale of TARP – Out of Mind But Not Out Of Existence

So you thought the 2008 TARP (Troubled Asset Relief Program) was a historic artifact from the Bush Administration?

Wrong!

TARP still is “alive and well” according to the Special Inspector General for TARP.

Special Inspector General Christy Romero has just released her 350 page quarterly progress report.

Here are the highlights –

  • The good news
    • People are going to jail as a result of their financial misdeeds –
      • And it did not take new laws or a new bureaucracy to get them there!
      • The most common convictions – in both state courts and federal courts – are for plain, old as money itself, fraud or mail fraud !!
    • The Special Inspector General Office is an aggregation of existing investigative personnel –
        • FDIC
        • FBI
        • Secret Service
        • Homeland Security etc.
      • Demonstrating, again, the best business practice of consolidation and focus to bring rapid problem resolution and closure.
    • Dodd Frank legislation placed a cap of < $500B on actual TARP spending – less than half of what was first feared might be needed.
      • But that is where the good news about both TARP and Dodd Frank ends –
  • The bad news
    • The Inspector General details billions of dollars the Treasury has written off  as a result of settlements of the “Old Chrysler” and “Old General Motors” “bankruptcies”
        • The Inspector General’s word – not mine!
    • When the TARP program is finally closed – probably in 2015 — the Inspector General expects overall tax payer losses > $50B.
  • Worst of all
    • AIG –  the insurance conglomerate –
      • whose big bets on insuring Credit Default Swaps, brought down the US economy’s “house of cards” in 2008
    • is still the largest TARP Debtor – owing tax payers > $30B.
    • Two years after the passage of the 2000 page Dodd Frank banking reform legislation –
      • AIG is still UNREGULATED –
        • Regulations not yet written
        • The SIG speculates that US Treasury regulators lack the skills and experience to regulate such a complex reinsurance entity –
      • Bottom-line — AIG is still “too big to fail”

Proving that Dodd Frank is more a monument to the folly of government overreaction than a beacon to our future economic security –

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