Final Cost Of TARP Was Miniscule, Boasts Geithner

Treasury Secretary Tim Geithner told a congressional oversight panel on Thursday that the economic rescue program passed during the Bush administration helped stave off a depression and ended up costing the government relatively little.

According to Geithner, the Troubled Assets Relief Program “brought stability to the financial system and the economy at a fraction of the expected costs.”

“In terms of direct financial cost, TARP will rank as one of the most effective crisis response programs ever implemented,” he added.

In prepared remarks, Geithner told the panel that TARP, which officially expired in October, cost taxpayers roughly $25 billion, according to a recent estimate put forth by the nonpartisan Congressional Budget Office. Forecasters initially predicted that the total cost of the bailout would ultimately reach upwards of $350 billion.

Geithner, however, was quick to remind that while the program helped to some extent, credit is still hard to come by for some, and the housing market remains subpar.

“We are still living with the scars of this crisis, and both our financial system and the economy as a whole continue to show signs of significant damage.”

To counter the continued need of businesses and families for financial assistance, Geithner said the government is using other avenues to provide help.

Click here to read more…

Oversight Panel Criticizes Mortgage Modifications For Falling Short

By Kyle LaFleur

The Congressional Oversight Panel held a meeting Wednesday to discuss the Treasury Department’s role in foreclosure mitigation programs under the Trouble Asset Relief Plan (TARP). The Treasury Department, which was represented by the department’s Chief of Homeownership Preservation Office Phyllis Caldwell, was criticized for the modest number of foreclosures prevented by these programs.

“Recently as the goal of preventing three to four million foreclosures has appeared increasingly distant, the Treasury has redefined as saying the goal now is offer temporary mortgage modification to three to four million homeowners,” said departing Delaware Senator Ted Kaufman (D), the panel’s chairman.

Kaufman warned that of these three million modification offers granted as few as 100,000 foreclosures would be prevented, which he felt deviated the program’s measurement of success from the ultimate goal of keeping homeowners in their homes. 

“In many ways its like a major league baseball batter pledging to swing at every pitch,” Kaufman said. “What matters is not how often you swing, what matters is how often you get on base.”  

In defense of the Treasury, Caldwell highlighted the Home Affordable Modification Program (HAMP) which was unveiled in 2009 and aids homeowners in bankruptcy by allowing them to modify their mortgage before they fall under foreclosure. Caldwell said the program has given struggling homeowners relief, used tax money efficiently and transformed the operations of the entire mortgage system.

“In the first quarter of 2009, nearly half of mortgage modifications increased borrowers’ payments or left their payments unchanged,” said Caldwell. “By the second quarter of 2010, 90 percent of mortgage modifications lowered payments for the borrower. This means homeowners are receiving better solutions.” 

According to Caldwell, it was still the department’s goal to reach three to four million homeowners with the expansion and enhancement of programs to respond to the housing crisis.  

“Our programs targeting unemployment and negative equity are just underway, and we continue to focus our efforts on reaching as many homeowners as possible,” said Caldwell.

In the 18 months since HAMP was created, panel member Damon Silvers said there have only been 467,000 modifications compared to seven million homeowners struggling with the possibility of foreclosure. Silvers described this number as a good thing that unfortunately “does not appear by any means, by any measure to be good enough.” 

Former Pay Czar Explains Executive Compensation Process

By Kyle LaFleur- Talk Radio News Service

During an appearance Thursday before the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP), former pay czar Kenneth Feinberg explained that compensation for executives at bailed out companies was based on individual executives’ abilities to avoid unnecessary risks and keep their companies competitive enough to repay TARP obligation

“When making compensation determinations, these principles demanded that I strike a balance between prohibiting excessive compensation and permitting the appropriate competitive compensation to attract talented executives capable of maximizing shareholder value,” Feinberg said in a submitted statement. 

Feinberg, whose tenure as special master for TARP executive compensation lasted from June 2009 to September of this year, was responsible for setting compensation for the “top 25” executives at seven companies including Bank of America, AIG and General Motors. 

“No one can argue against the ‘public interest,’ but in the context of executive pay, it is very difficult to define or measure,” said Congressional Oversight Panel Chairman Sen. Ted Kaufman (D-Del.)

According to Feinberg, by following the principles, Bank of America, Citigroup and Chrysler Financial are already out of the jurisdiction of the special master. Citigroup will still fall under the rules of TARP until it repays its obligation.  

Waters Defends Herself Against Charges

Rep. Maxine Waters (D-Calif.) held an unusual press conference this morning with reporters inside the Capitol to plead her innocence over ethics charges against her and her chief of staff.

The 90-minute roundtable was held in an “undisclosed” location inside the Capitol building, and was limited to members of the press who received invitations to attend from Waters’ DC office. During the press conference, Waters defended herself against accusations by a House ethics panel that she used her influence to secure bailout funds in 2008 for a bank in which her husband owned a significant amount of stock.

The bank, OneUnited, is a small minority-owned firm based in Boston that suffered heavy losses in 2008 due to its investment in Fannie Mae and Freddie Mac. Shortly thereafter, bank executives asked the U.S. Treasury Department for $50 million to stay afloat, and ended up receiving $12 million in Troubled Asset Relief Program (TARP) funds.

The Ethics committee’s statement of alleged violations (SAV) against Waters includes charges that she “violated the letter and spirit of House rules and federal regulations designed to prevent lawmakers from using their posts to benefit themselves or giving the appearance of conflicts of interest.” Nonetheless, Waters claimed today that she did nothing wrong.

“Neither my staff nor I engaged in any improper behavior; we did not influence anyone; and we did not gain any benefit,” she said. “This case is not just about me. This case is about access, about access to those who are not heard by people in power.”

Waters said she arranged the press conference to clear up any “misinformation” about her case. She said she had not spoken about it beforehand with any of the House Democratic leadership, some of whom were visibly annoyed with Rep. Charles Rangel (D-N.Y.) for publicly discussing his own alleged ethics violations earlier in the week.

Click here for more of Rep. Waters’ response to the ethics committee’s investigation.

Geithner Thanks TARP For Record-Low Interest Rates

by Miles Wolf Tamboli
Talk Radio News Service

Treasury Secretary Tim Geithner said Tuesday that due, in part, to the Troubled Asset Relief Program (TARP), credit costs have plummeted, creating new opportunities for homeowners and small businesses.

"The financial system is in a much stronger position, and because of that, the cost of credit for homeowners, for consumers, for businesses has fallen significantly," Geithner said. "Rates for mortgages and auto loans, for example, are at historic lows."

Congressional Oversight Committee Chair Elizabeth Warren pressured Geithner to provide a "metric" for TARP's success in protecting American citizens from the mortgage crisis.

"You set aside $50 billion, and what do you have to show for it? What is the metric for success here," she questioned. "Is it 120,000 families saved over fifteen months, at a time when 186,000 are posted for new defaults and foreclosures every month? Is that a successful program? How do we decide when the program is working?"

Despite reassurances from the Treasury Secretary, lawmakers were left wondering in what ways to measure the success of Tarp before the program's expected termination in October.

"This hearing should be a eulogy for TARP. We are working very hard to put this program to rest," Geithner said. "It's not going to solve all the problems facing the country, it wasn't designed to, but it's done the essential thing it was designed to do and, therefore, our expectation is that it will be allowed to expire."

The Treasury Secretary also used the hearing as an opportunity to show his support for financial reform, which he sees as a chance to shift focus from crisis response to crisis prevention.

"The House and the Senate are now very close to enacting the strongest set of reforms we've considered as a country since the Great Depression," said Geithner. "The reforms will end 'Too Big To Fail' [and] non-bank financial firms, such as AIG, will no longer be allowed to exploit regulatory cracks."

Geithner said that the best thing Congress can do to tackle the remaining credit problems facing America is to pass the set of credit programs that benefit small businesses.