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Entries in TARP (39)

Wednesday
Dec102008

Tearing into TARP 

A number of Congressmen have expressed ire with the Treasury Department’s management of the Troubled Asset Relief Program (TARP), citing a lack of oversight, a failure to mitigate the housing crisis and credit market, and an overall sense of deception over Paulson’s last minute decision to help successful financial institutions rather than failing ones.

“If there’s one thing I regret, I regret attempting to be cooperative in providing to treasury the flexibility to deal with out economic crisis,” said Rep. Maxine Waters (D-Calif.) during a House Financial Services Committee on “Oversight Concerns Regarding Treasury Department Conduct of the Troubled Assets Relief Program”.

“We don’t have any systematic way to help homeowners modify these loans, the treasury has refused to use the dollars to buy up the non performing assets, and the money has basically gone as equity investments in banks who are not putting the money back out so that our consumers can have access to credit,” the Congresswoman said.

Acting Comptroller General Gene Dodaro of the Government Accountability Office recounted recommendations from a recently issued report, including the need for the Treasury Department to limit executive compensation and confirming that the use of funds complies with the legislation “To date, Treasury hadn’t finalized their strategy for monitoring these very important initiatives.”

Neel Kashkari, the Interim Assistant Secretary of the Treasury for Financial Stability, appeared before the committee and defended many of the Treasury Departments decisions.

Essentially dismissing the allegations of a inadequate oversight, Kashkari discussed the formation of the Oversight Board the, the law required the first [Oversight] board meeting to take place within fourteen days. We moved very quickly, and the Oversight Board met within four days...The law requires the Board to meet once a month, but it has already met five times in the just two months since the law was signed.”

Kashkari also defended the choice to offer financial aid to healthy banks, “if we have a dollar, and we give this one dollar to a healthy bank or gave that same dollar to a failing bank, the healthy bank is in a much better position to turn around and make new loans...they’re the ones who are in the best position in this time of economic disruption to step up and make new loans.”

The Assistant Secretary said that this choice would help restore confidence overtime.

Tuesday
Nov182008

House Committee grills Paulson, Bernanke on bailout decisions

The House Committee on Financial Services held a hearing on "Oversight of Implementation of the Emergency Economic Stabilization Act of 2008 and of Government Lending and Insurance Facilities; Impact on Economy and Credit Availability" on Tuesday in which they questioned Secretary of Treasury Henry Paulson, Federal Reserve Board Chairman Ben Bernanke and Federal Deposit Insurance Corporation Chairman Sheila Bair.

“At this point, public confidence in what we have done so far is lower than anyone would have wanted it to be,” said Chairman Barney Frank (D-MA), “it is essential that we do something to use some of the TARP’s (Troubled Asset Relief Program) funds” to stop the tide of foreclosures in the country. Chairman Frank and other Democrats were critical of how Secretary Paulson had decided to use some of the $700 billion bailout money to buy preferred stocks in banks rather than buy “toxic assets” for which Congress initially called for.

Paulson defended his position by arguing that the best way to save the credit market was by injecting cash directly into banks. “It is very, very important to stay with the purpose of the TARP,” said Paulson. “This is all about protecting the financial system, avoiding collapse, and recovery.”
Monday
Nov172008

Bailout bill oversight within sight

Although weeks have past since the Program was approved and $290 billion of the first $350 billion has already been pledged, the President has announced his nomination: Neil Barofsky, Assistant United States Attorney in the Souther District of New York. Appearing before the Senate Finance Committee, Barofsky outlined his professional background and explained how he would utilize his position to bring about proper oversight.

“This past summer, our United States Attorney asked me to supervise a newly created Mortgage Fraud Group to respond to the havoc that mortgage fraud has caused to countless homeowners and lenders in our district...we attacked at the roots of those who have contribute significantly to the current housing and financial crisis through wholesale fraud of homeowners, lenders, and investors,” said Barofsky.

“‘[It] has given me the tools to identify the markers of fraud throughout the financial industry, the necessary expertise in investigating such frauds, and the experience of establishing a plan of attack on those committing these fraud.”

Committee member Senator Charles Schumer (D-N.Y.) elaborated on Barofsky’s previous experiences.

“Mr Barofsky demonstrated great personal bravery when he investigated the Revolutionary Armed Forces of Columbia, FARC, the narco-terrorist group that controls more than half the world’s annual cocaine production. He successfully indicted the FARC’s top 50 leaders at great risk to his own personal safety,” said Schumer.

Following Congress’s initial rejection of the Troubled Assets Relief Program, the bailout bill was subjected to numerous alterations. One important change was the addition of an inspector general to provide the program with oversight.

Barofsky described how he would bring his investigative experience to the position, stating “We will need to establish an investigative arm, which I can assure this committee will tirelessly investigate and refer for prosecution any individual or entity that tries to criminally profit from the Program.

Senator Jay Rockefeller (D-W.V.) warned that banks and those high up in financial institutions have ways of “slipping things by” and essentially asked if Barofsky would be a tough enough inspector general to provide proper oversight to which Barofsky responded, “I won’t give you empty words. Instead I’ll just point to my record and what I’ve done as a prosecutor in the Southern district of New York. Whether it was attacking the FARC in the jungles of Columbia or Refco on Wall Street, all I’ve done is to go after those who violated the law. And I will take that exact same tenacity and dedication to this job as I’ve done with every prosecution I’ve worked on.”
Friday
Nov142008

U.S. Chamber of Commerce preps for G-20

In preparation for leaders convening for the G-20 this weekend, the U.S. Chamber of Commerce (USCC) Center for Capital Markets Competitiveness (CCMC) has revealed seven key principles to help strengthen the U.S. financial markets.

According to the CCMC’s press release, the principles were developed in consultation with a wide range of business leaders, academics, and investors. David Hirschmann, president and CEO of the U.S. Chamber CCMC said the principles are: (1) promotion of economic stability, efficiency and growth; (2) management of systemic risk; (3) internationalization (“there’s no such thing as a domestic market”); (4) comprehensive regulation and oversight; (5) increased transparency; (6) investor opportunity, capital formation, and consumer protection; and (7) sustaining and enhancing financial reporting.

There were comments in regard to the congressional proposal to assist General Motors Corp., Ford Motor Co. and Chrysler LLC with $25 billion in loans from the Troubled Assets Relief Program (TARP). David Chavern, Executive Vice President and Chief Operating Officer of the USCC said, “allowing them to fail during what will end up being just a relatively short period of economic dislocation would be a big mistake…We have been very public in supporting the finalization of $25 billion in financing for new technologies.” Chavern continued “we don’t know how long this recession’s going to last, but however long it’s going to last it’s going to be a lot shorter of a time that the auto industry has existed in this country.”

Chavern also said the USCC strongly supports a second stimulus package especially for extending unemployment benefits and investing in infrastructure.

According to the official G-20 website, the G-20 is an important forum to promote dialogue between advanced and emerging countries on key issues regarding economic growth and stability of the financial system.



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