Neil Barofsky: Bailout Helped But At A Great Cost

[AllentownJake]

WASHINGTON — The man who watches over the $700 billion in government money given to banks and other institutions to avert a financial collapse said Wednesday he thinks it's too early to say how much will be repaid to the taxpayers.

Just as the Obama administration prepares to announce a new TARP-like program for small community banks, Inspector General Neil Barofsky said he believes that "it's unrealistic to think we're going to get all of that money back."

The Treasury Department has spent more than $454 billion through TARP programs. Forty-seven recipients have paid back nearly $73 billion. That means more than $317 billion remains outstanding with the program set to expire Dec. 31.

Later Wednesday, President Barack Obama is expected to announce the community bank assistance effort. The American Bankers' Association has asked for $5 billion in rescue-fund money to help small banks extend more loans.

Asked on a nationally broadcast interview how he would grade the program, Barofsky said, "I think right now it would have to be an incomplete." Barofsky did say the program was successful in "pulling us back" from a financial collapse, however. At the same time, he told CBS's "The Early Show" that the resumption of huge executive bonus payments by some of the same institutions that benefited from the government bailout has sown distrust and cynicism among many taxpayers.


Read more at: http://www.huffingtonpost.com/2009/10/21/neil-barofsky-bailout-hel_n_328079.html

[HamdenRice]

1. I'm glad that at least he put the actual number out there -- $454 billion

He himself scared the bejessus out of everyone a few weeks ago by adding up all the guarantees and potential contingent liabilities and throwing out a number in the $20 trillion range, which has become an idee fixe in some people's minds now as a free money gift to "fat cats".

As this report makes clear TARP was authorized to invest $700 billion, but only $454 billion were used.

He also now agrees that it prevented a complete financial and economic collapse.

From his interviews on the AM news, he seems to saying (correct me if I'm wrong) that the big banks (the ones Paulson gathered in his office and to whom he made the offer that couldn't be refused) will probably pay back everything, but it's the small, regional banks that we may not get back the money from.

He also oddly added $50 billion deployed from TARP to the mortgage modification program which directly helps homeowners as money that we probably won't get back, but it seems to me that like the stimulus money or middle class tax cuts, it's not necessary for money given directly to consumers to be paid back; the point is the costs that it avoids.

[AllentownJake]

2. He's predicting a 150 billion dollar shortfall

Projecting some of the big banks not paying back TARP money.

[Phoebe Loosinhouse]

3. He was just on with Dylan Ratigan

Worth watching if someone puts it up on youtube or if they have it on MSNBC later.

[AllentownJake]

4. will be searching for it

:hi:

[Turbineguy]

5. True enough.

But there are times when you have to do something, even if it's wrong.

[AllentownJake]

6. I don't believe this was necessary

I believe nationalization should have occurred.

[HamdenRice]

7. They're not mutually exclusive

I think it was definitely necessary, as does Barofsky. The investment in preferred shares rather than loans means it was in effect a partial nationalization, something I was advocating last fall. But I think the feds should have used that investment to actually run things, ie to make the nationalization effective in terms of management.

Unfortunately, the American public is not DU and the msm scared the bejeesus out of them that secret muslim socialist Barak Obama was implementing socialism, which made the actual implementation of nationalization politically imposssible.

[AllentownJake]

8. Well we are fucked because of it

The same games are being played again.