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Inspector General of TARP - it sucks for everyone

 
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prozacrefugee
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Joined: 19 Nov 2003
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PostPosted: Wed Mar 30, 2011 5:02 pm    Post subject: Inspector General of TARP - it sucks for everyone Reply with quote

For everyone but the banksters, that is.

http://www.nytimes.com/2011/03/30/opinion/30barofsky.html?_r=1
Quote:
The actís emphasis on preserving homeownership was particularly vital to passage. Congress was told that TARP would be used to purchase up to $700 billion of mortgages, and, to obtain the necessary votes, Treasury promised that it would modify those mortgages to assist struggling homeowners. Indeed, the act expressly directs the department to do just that.

But it has done little to abide by this legislative bargain. Almost immediately, as permitted by the broad language of the act, Treasuryís plan for TARP shifted from the purchase of mortgages to the infusion of hundreds of billions of dollars into the nationís largest financial institutions, a shift that came with the express promise that it would restore lending.

Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit. There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds. It was only in April of last year, in response to recommendations from our office, that Treasury asked banks to provide that information, well after the largest banks had already repaid their loans. It was therefore no surprise that lending did not increase but rather continued to decline well into the recovery. (In my job as special inspector general I could not bring about the changes I thought were needed ó I could only make recommendations to the Treasury Department.)
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