From TARP to Crap

I am not a fan of the bailouts in any shape or form. Geithner was claiming that it would be profitable. The truth is they have no idea of whether it is working or not. Now we have confirmation from an independent source that breaks it down for the American public.

Nov. 12 (Bloomberg) —

Neil Barofsky, the federal watchdog for the $700 billion financial industry bailout, said the program will “almost certainly” result in a loss to U.S. taxpayers.

“We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic,” he said today at the Bloomberg Washington Summit. “It’s almost certainly going to be a loss.”

Barofsky, the special inspector general charged by Congress with policing the Troubled Asset Relief Program, also said he’s conducting 65 investigations of possible fraud. The former federal prosecutor has pressed the Treasury Department to be more open about the rescue of companies including insurer American International Group Inc. and automakers General Motors Co. and Chrysler LLC.

“Tens of billions of dollars are likely to be lost on the automotive bailout,” Barofsky said. In addition, some banks that received TARP money are failing, so the aid they received will be wiped out.

I really think the money spent would have been put to better use by strengthening already existing organizations like the FDIC which already know what they are doing. I know it is easy to criticize after the fact, but I was against the bailouts from day 1. Honestly, when we are talking about a trillion dollars to be spent, I don’t think you can put an effective plan in a week. Now that the plan has been executed, we can see the plan was weak and the results have been a failure.

Reuters:

The 33 banks that missed dividend payments in August have received $4.5 billion of TARP money. The biggest is CIT. Previously it paid $44 million of dividends, but with a bankruptcy filing looking likely, Treasury’s $2.3 billion investment seems headed toward zero.

A few of the banks may ultimately be able to pay what they owe, according to Fitzwater. These newer banks — “de novo” in regulator parlance — actually are not allowed to pay dividends.

Still, the bigger issue is the ultimate cost of the bank bailout, which we may not know for years.