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Thievery Under the TARP
We are being robbed big-time, but you can't say we haven't been warned. Not after the release Tuesday of a scathing report by the Treasury Department's special inspector general, who charged that the aptly named Troubled Asset Relief Fund bailout program is rife with mismanagement and potential for fraud. The IG's office already has opened 20 criminal fraud investigations into the $700 billion program, which is now well on its way to a $3 trillion obligation, and the IG predicts many more are coming.
Special Inspector General Neil M. Barofsky charged that the TARP program from its inception was designed to trust the Wall Street recipients of the bailout funds to act responsibly on their own, without accountability to the government that gave them the money.
He pointed to the example of AIG, which has acted as a conduit of funds to the banks it had insured without being required to tell the government what it is doing: "Failure to impose this requirement with respect to the injection of yet another $30 billion into AIG would not only be a failure of oversight, but could call into question the credibility of the government's efforts."
AIG is just one example in a bailout that has left the financial conglomerates unsupervised as they spend taxpayer money in what the report termed a government program of "unprecedented scope, scale and complexity," putting the public and the Treasury Department in the dark as to how the money is being used by the very tycoons who got us into this mess. "The American people have a right to know how their tax dollars are being used," Barofsky wrote in the report, which sharply criticized the government for failing to hold financial institutions accountable.
For all of its criticism of the original program, designed by the Bush administration, the report was equally severe in denouncing the Obama administration's plan to partner with hedge funds and other private capital groups to buy up the "toxic" holdings of the banks. Charging that the plan carries "significant fraud risks," the inspector general's report pointed out that almost all of the risk in this new trillion-dollar plan is being borne by the taxpayers. The so-called private investors would be able to put up money they borrowed from the Fed through "nonrecourse" loans, meaning if the toxic assets purchased prove too toxic and the scheme failed, the private investors could just walk away without repaying the Fed for those loans.
The reason those loans may prove even more toxic than expected and the price paid by this government-underwritten partnership far too high is that the government is purchasing the most suspect of the banks' mortgage packages. In addition, the plan is to accept at face value the evaluation of those packages by the very same credit-rating firms whose absurdly wrong estimates of the dollar worth of these securities helped create the problem that now haunts the world's economy. "Arguably, the wholesale failure of the credit rating agencies to rate adequately such securities is at the heart of the securitization market collapse, if not the primary cause of the current credit crisis," the report found.
As with the entire banking bailout, the new plan of Obama's treasury secretary, Timothy Geithner, is likely to enrich the very folks who impoverished the rest of us, as the report notes: "The significant government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit."
At the heart of this potentially massive fraud was the original decision of Henry Paulson, President Bush's treasury secretary and a former Goldman Sachs chairman, to not require the recipients of the bailout, such as his old firm, to account for how the money was spent. Unfortunately, President Obama's administration continued that practice.
The only difference is that the amount of public money being put at risk is now far greater, and the hedge funds, which are totally unregulated, have been brought in as the central players. One of the largest of those hedge funds, D.E. Shaw, carried Obama's top economic adviser, Lawrence Summers, on its payroll to the tune of $5.2 million last year. He may have reason to trust these secretive enterprises that operate beyond the law, but the public does not.
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36 Comments so far
Show AllThe fact that the heart of Geithner's Public Private Investment Program (PPIP) is to give worry-free trillions of taxpayers dollars to unregulated corrupt hedge funds to overpay by a factor of 3 for toxic crap floating in the bank's toilet bowls and then stick the taxpayer with the losses should have you laughing and crying at the same time.
Shame on Geithner for being an embarassment to con-men everywhere. Con-men are supposed to be smooth and slick. He is neither.
Mike Whitney at ICH reports that:
...a recent report from a congressional oversight committee (The Warren Report) revealed that there are three ways to fix the banking system; liquidation, reorganization and subsidization. Geithner has rejected all three of these preferring to implement his own make-shift Public Private Investment Program, which is thoroughly untested, has no base of public or political support, and is clearly designed to shift the toxic debts of the banks onto the taxpayer through publicly-funded non recourse loans. (Geithner's plan will allow the banks to establish off-balance sheet operations so they can buy their own bad assets from themselves using 94 percent public money) The whole thing is a obvious swindle papered-over with gibberish.
"Shame on Geithner for being an embarassment to con-men everywhere. Con-men are supposed to be smooth and slick. He is neither."
Hey, cut the bankster fiend some slack. What he lacks in smoothness he more than makes up for in shamelessness and brazenness. I suspect that many con-men are more impressed than you imagine.
When you've got the President of the United States and virtually every Wall Street Banker on your side it's easy to be brazen.
Take away his powerful friends and he's a three-card monte street corner hustler.
You make a good point. However, I still think it takes uncommon courage to stand in front of the entire nation and to announce that you are going to be stealing large amounts of money from virtually every taxpayer in order to further enrich your black-hearted thieving cronies.
Bad call kivals. No courage is required for financial industry crooks who have never had a conscience, never will, and have been fully utilizing their license to steal for the past quarter century.
Financial industry crooks consider this mode to be business as usual.
FDR's New Deal was a half century experiment that succeeded in keeping the crooks under control and limiting the damage they could do. Every day that passes without Obama re-regulating the finacial industry costs US taxpayers billions and extends the duration of the depression.
You may be right. However, while Geithner's cronies will receive truckloads of loot with little risk of any nature to themselves, Geithner has put himself in a position to become quite infamous. If there is just a scintilla of justice in this world, Geithner will be vilified sooner or later, and that could lead to various and unpredictable personal setbacks. If there is just slightly more justice in this world, some citizen angered over all the pain and suffering surely to flow from this monumental act of chicanery may someday deal with Geithner's larceny with extreme prejudice.
I like your angle Dave,
No need for me to comment as the ones above pretty much sum it up.
Sioux Rose
DAVE B: Excellent satire, if only it was JUST a skit for Saturday Night Live! It seems incomprehensible that a theft of this magnitude is not just being allowed, but furthered by those elected to protect the public welfare. The right will make shows turning the single welfare Mama into the enemy, but smile as the corporate swindlers walk away with the crowned jewels.
This whole government is corrupt from top to bottom. Voting won't work. Petitions don't work. Common sense and logic left the building long ago. We now live under a third world regime, and there is no way to change it short of violence, which, of course, only breeds more violence. Hyperinflation is coming and there will be a hundred million homeless people in this country by the end of Barky's only administration. He will be replaced in 2012 by someone worse.
You said it all and how right you are! This nation been reduced to nothing but a SCAM. The phase we are in now can be likened to the last act of a lion kill. The big cat has taken down the zebra and dined until he's gorged. The lion leaves and the hyenas, jackals and buzzards move in to take what little is left. That's where we are now.
"The American people have a right to know how their tax dollars are being used, Barofsky wrote in the report, which sharply criticized the government for failing to hold financial institutions accountable."
The fiduciaries (Congress) of the public $$trust have been neglecting their duties to the citizens of this country for decades. Our public servants have been telling us that they have a "prerogative", not an obligation to oversee how our tax dollars are being spent.
Article 1, Section 9, Clause 7 of the Constitution states that only Congress can appropriate funds and there shall be a regular accounting of how these funds are spent.
Does it sound like Congress is acting or representing our interests if they refuse to oversee the spending of our tax dollars? Is this the behavior of an honest and open government that's accountable to "the people"?
A corrupt administration will administer a corrupt stress test. What could be worse. Banks that are still too weak to lend get public money to prop themselves up a little longer while being declared by the same administration officials as adequately capitalized. How long do they think they can extend this charade before it all collapses. Obama is complicit-- it is his problem now-- and it will bring down his administration.
Bank Profits are Bogus.
We are being lied to once again.
http://informationclearinghouse.info/article22468.htm
Socialism for the rich.
SOME banks were rescued (not all banks needed to be rescued), not to save the bad bank's stock holders, not to save the U.S. economy, but to SAVE the debt holders of those bad banks.
If capitalism where to be practiced, AIG, JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley would have gone bankrupt just like Bear Sterns did. If allowed to go bankrupt, the stock holders would have lost everything and the bond or debt holders would have lost maybe 80% to 90% of their investment.
The politically powerful rich debt holders where able to get American tax payers (both current and future) to pay for these banks' bad decisions (I hope they were just bad decisions and not outright fraud) and protect their investments.
Money went from all Americans to the few rich. Paulson and Geithner are whoring for their rich friends and supporters.
useless comment deleted by author
Thievery Under the TARP (Thieves and Assholes Ripoff the Public)
This is what the party of FDR, Gene McCarthy, Bobby Kennedy, George McGovern and Paul Wellstone has come to.
Duh.
Thievery was the whole purpose of TARP. Still is.
Oregoncharles
Why is it so hard for people to see this? Last September, my cousin, at East Coast Liberal Dem and proud of it, refused to believe that the bailout was a scam. She despised everything Bush was about and yet could not see the venality in the TARP. If Barney Frank was supporting it, it must be OK.
Punish our white-collar pirates!
"Why are you a pirate?" "That's where the money is," said the young Somali native.
"Why do you turn toxic sub-prime mortgages into AAA rated securities?" That's where the money is, answered the young Wall Streeter.
From Dr Wu's latest book: "Your Pirates and Mine"
"What a fine mess you made, Mr. Banker."
The trouble with the large banks and with Goldman-Sachs in particular, is that it runs the government-as in, Government-Sachs. I, for one, would let G-S,BA,Citi go down the tubes and return government to the taxpayers.
It was not for nothing that President Eisenhower warned of the military industrial complex running the country. Turned out, it's true--now it's called the Wall Street/Pentagon complex.
Who is in charge of all of us? Why, none other than Larry Summers (Wall Street) and Robert Gates (Pentagon). The congress is all bought and paid for, the media is corporate run. Is there a way out of this fine mess?
Well put, dr wu. I was about to post relabeling the US as The United States of Goldman Sachs.
I must say, the thought of Larry Summers being in charge of us is horrifying. Although being female, I have additional reasons for disliking him. At least Harvard fired him for being a raving sexist. Although Obama apparently is willing to overlook that character flaw.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
Damn it feels good to be a banksta.
:-)
"...putting the public and the Treasury Department in the dark as to how the money is being used by the very tycoons who got us into this mess."
Can you imagine handing a car dealer $20K, then he refuses to tell you what kind of car has been ordered, what color, delivery date, etc? Then, when the car finally arrives, it's missing an engine and transmission, so you demand your money back. The dealer not only doesn't give it back, the government - you, again - buys the toxic car from him for $40K, then the government - you, again - sends you the bill for the extra $20K.
And people ask me why I refuse to file a tax return...
The reference to "toxic assets" reminds me of toxic landfills. Wasn't that a private company maximizing its profits as fast a possible and then folding up shop and filling bankruptcy, leaving the taxpayer to clean up their mess? For those who've lost track, there are over 1,300 Superfund sites in the United States that represent actual "toxic" assets...err liabilities.
I heard the Rothschilds got the money.
I can't hope but wish, perhaps naively (probably for sure) that somehow this is going to be a (backassward) way of highlighting those who are hell bent on destroying us from the inside (treason) by dropping the veils of secrecy, investigating and exposing our (banking) system for what it is... predatory capitalism, with the credit card industry and living outside our means, Americans need to wake up and demand reality and accounting for everything we have allowed (been duped by) corporate interests to get away with, for our leadership, as well as ourselves.
Said before, but worth repeating - "The best way to rob a bank, is to own one."
TARP is not being mismanaged, it is doing exactly what it was designed to do.
TARP is a cover - a cover of a failed economic system. Since the creation of the Plunge Protection Team (Working Group on Financial Markets) in 1988 the market system has been manipulated by the incestuous relations between Banks, Treasury, Federal Reserve, Securities and Exchange Commission, Wall Street and Insurance industry. Also with years of deregulation dogma since the Carter administration, fraud rules unimpeded.
In 1933, the only thing to fear was fear itself, in 2009 the only thing to fear is the truth (Markets are the Fraud). The psychological effects of this truth are what scares the politicians into silence.
So what choices does the Obama administration have?
Tell the shocking truth of fraud and watch the following market correction destroy the economy on his four year term, or buy into the continuing country club marketing campaign to convince us masses that the "economy is basically sound".
TARP is the hush money, it's how to keep the banker conspirators quiet about the truth. Bonuses to the blackmailer bankers, and assisted suicides to the whistleblowers.
Love your comment. Many thanks.
Sioux Rose
Irevolt: Bingo! Well-explained.
Love those Conservative Christian Values — trillions of dollars in lost business, millions of people
thrust into hunger and homelessness and crime on the rise. The 'end times' must surely be near.
Let's all take the year off!
Get this. My employer, one of the banks that received TARP funds, has blocked internet access to www.commondreams.org. Scarey.
Umm...you shouldn't be working there in the first place.
Thievery Under Tarp.
Brought to you by the department of redundancy department.