That feeling you’re being had
Tim Geithner made the Sunday morning talk show circuit yesterday, making his case for the way the administration is handling the ongoing financial crisis. When he went on ABC’s program with George Stephanopoulos, he revealed that the Treasury thinks it has $135 billion left in uncommitted TARP funds. This was news to George, since his own fact-finders estimated there was only $32 billion remaining. The discrepancy, according to Secretary Geithner, was explained like this:
“Now that, that estimate includes a judgment, a very conservative judgment, about how much money is likely to come back from banks that are strong enough not to need this capital now to get through a recession. But that’s a reasonably conservative estimate. And it gives us, and this is very important, substantial resources to move ahead with this broad based sweep of initiatives to help get the financial system back in the business of providing credit.”
Now, that to me triggers major alarm bells when I hear it. What it means is that the taxpayer isn’t going to be made whole when the money starts coming back. Instead of returning as revenues for the federal government (thus reducing our need to tax or borrow), the Treasury clearly expects that any repayments can be used for continuing bailouts.
To put it another way, the $700 billion TARP program is changing once again. Apparently, that money is going to be re-distributed over and over until the Treasury finally can’t get any of it back (at which point it’s time to ask Congress for more).
Honestly, I haven’t read the TARP authorization (but hey - hats off to anyone with that kind of time!), so I have no reason to doubt the legality of what the Treasury is doing. But we were sold something different. We were told that this huge allocation of taxpayer money wasn’t so much a spending spree as it was a bad investment. Sure, all but the rosiest projections assumed we would lose some of that money, but we’d get most of it back in the end, and in return we’d save our banking system. But so long as every dollar that DOES come back returns to Treasury rather than the taxpayer, it’s just a countdown until it’s gone.
March 30th, 2009 at 8:21 pm
“…about how much money is likely to come back from banks that are strong enough not to need this capital now to get through a recession.”
Um, could it be that when they say “that are strong enough not to need this capital now” they’re referring to the original money allocated which was not needed and therefore still available rather than any return on the original investment which would constitute a payback?
And a question, I have to use my name and email address to post here so you’ve got a pretty good idea who I am, which I don’t mind in the least, but who are you?…
March 30th, 2009 at 9:47 pm
Moderation? Already?
March 30th, 2009 at 11:03 pm
To your first point, I’m pretty sure the estimates that Stephanopoulos’s analysts were working with was for money that had already “gone out the door”. It’s consistent with reports in the news about various healthy institutions, like Wells Fargo and Goldman Sachs, that want to return their portion of the TARP funds as soon as they can arrange it. But if I’m wrong, and the money was never actually allocated in the first place, I agree that would change the picture.
As for the moderation, it’s not moderation for censorship - I’ve simply had a bad experience in the past with getting slammed by robots. But don’t worry - once you’ve had a single comment approved, your future comments will go through without the extra step.
As for who I am - I’m Mason Wolf , the guy who runs hbblogs.com. I decided I wanted a new blog focused on issues like this one, so I remade the defunct “Press Room”. I’m not wedded to the name though. It may change in the coming days.