TARP Inspector General: TARP Catastrophe Coming
Keep in mind as you read the following: the Inspector General overseeing the TARP operations is the one who is issuing the warning to Congress.
Morgen Richmond, at Big Government, Inspector General: TARP has created a looming disaster, provides a public service by breaking down the TARP report to the level of a DANGER! sign for Americans.
Yesterday the Inspector General for the Troubled Asset Relief Program (SIGTARP) released their Quarterly Report to Congress for the period ending 12/31/2009.
To the extent that institutions were previously incentivized to take reckless risks through a “heads, I win; tails, the Government will bail me out” mentality, the market is more convinced than ever that the Government will step in as necessary to save systemically significant institutions. This perception was reinforced when TARP was extended until October 3, 2010, thus permitting Treasury to maintain a war chest of potential rescue funding at the same time that banks that have shown questionable ability to return to profitability (and in some cases are posting multi-billion-dollar losses) are exiting TARP programs.
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Stated another way, even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.
Richmond’s assessment of the report seems to be right on:
The White House is in the midst of a campaign to focus populist anger on Wall Street, which is certainly deserving of some blame for the financial crisis. But by continuing to leverage the future of our children by adding trillions of dollars more to our national debt over the next few years, the Administration is demonstrating where the ultimate blame should reside for the culture of irresponsible borrowing and financial mismanagement which led us to this point. It’s not Wall Street – it’s Pennsylvania Avenue.
Click the link, read the entire assessment. It’s not pretty–but it’s necessary.
The TARP catastrophe can be avoided, but only if the same Senators and Congressmen who got us into the mess will pay attention and muster the political will to do the right thing.
In which case, everybody better buckle their seat-belts.
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What does the debt have to do with reining in the banks? Seems to me these are separate problems., especially when the government now needs to spend to help Main Street.
Where in the speech are the demands for regulations, real oversight, and investigations?
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