The following is from the Quarterly Report to Congress, July 21, 2009 - Office of the Special Inspector General for the Troubled Asset Relief Program.
EXECUTIVE SUMMARY
In the nine months since the Emergency Economic Stabilization Act of 2008
(“EESA”) authorized creation of the Troubled Asset Relief Program (“TARP”), the
U.S. Department of the Treasury (“Treasury”) has created 12 separate programs
involving Government and private funds of up to almost $3 trillion. From programs
involving large capital infusions into hundreds of banks and other fi nancial
institutions, to a mortgage modifi cation program designed to modify millions of
mortgages, to public-private partnerships using tens of billions of taxpayer dollars
to purchase “toxic” assets from banks, TARP has evolved into a program of
unprecedented scope, scale, and complexity. Moreover, TARP does not function
in a vacuum but is rather part of the broader Government efforts to stabilize the
fi nancial system, an effort that includes dozens of inter-related programs operated
by multiple Federal agencies. Thus, before the American people and their representatives
in Congress can meaningfully evaluate the effectiveness of TARP, not
only must the TARP programs themselves be understood, but also TARP’s scope
and scale must be placed into proper context with the other Government programs
designed to support the fi nancial system. That is one of the ambitious goals of this
report.
In this report, the Offi ce of the Special Inspector General for the Troubled
Asset Relief Program (“SIGTARP”) endeavors to (i) explain the various TARP
programs and how Treasury has used those programs through June 30, 2009, (ii)
provide a brief explanation of the numerous other Government programs that have
been implemented by Treasury and other Federal agencies to support the fi nancial
and mortgage markets; (iii) describe what SIGTARP has done to oversee the various
TARP programs since its April Quarterly Report to Congress, dated April 21,
2009 (the “April Quarterly Report”), and (iv) set forth a series of recommendations
for the operation of TARP.
TARP IN FOCUS, AND IN CONTEXT
TARP, as originally envisioned in the fall of 2008, would have involved the purchase,
management, and sale of up to $700 billion of “toxic” assets, primarily
troubled mortgages and mortgage-backed securities (“MBS”). That framework was
soon shelved, however, and TARP funds are being used, or have been announced
to be used, in connection with 12 separate programs that, as set forth in Table 1
on the next page, involve a total (including TARP funds, loans and guarantees from
other agencies, and private money) that could reach nearly $3 trillion. Through
June 30, 2009, Treasury has announced the parameters of how $643.1 billion of
the $700 billion would be spent through the 12 programs. Of the $643.1 billion
that Treasury has committed, $441 billion has actually been spent.
As massive and as important as TARP is on its own, it is just one part of a much broader Federal Government effort to stabilize and support the fi nancial system.
Since the onset of the fi nancial crisis in 2007, the Federal Government, through many agencies, has implemented dozens of programs that are broadly designed to support the economy and financial system. As detailed in Section 3 of this report, the total potential Federal Government support could reach up to $23.7 trillion.
Any assessment of the effectiveness or the cost of TARP should be made in the context of these broader efforts. Section 3 also provides a tutorial on the Federal Reserve System, which administers many of the non-TARP credit and liquidity facilities that are providing support to the financial system.
A number of critics have attacked Barofsky - he was interviewed regarding the attacks and his analysis that the costs will total $23 trillion ...
Podcast Interview with Inspector General for TARP: Treasury Department Is Not Being Transparent
July 22, 2009 1:32 PM
ABCNews.com-->
ABC News' Jake Tapper and Huma Khan report:
On this week’s ABC News Shuffle podcast, we spoke to Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), who just this week released a report on the whopping potential federal obligation of the bailout and other programs to jumpstart the economy.
You can download the podcast on iTunes or listen to it HERE.
Barofsky told us that the Treasury Department “is not being transparent with respect to the TARP,” the $700 billion in funds (and more) the government is using as loans and bailouts to help stabilize the financial markets. “They’ve failed to adopt some very basic recommendations we’ve had toward transparency,” he said.
Called the “SIGTARP,” Barofsky appeared before Congress this week and told them that the government’s commitment to fix the financial system could potentially reach $23.7 trillion, and criticized the Treasury Department for calling his team’s estimate “inflated.”
“I think that the Treasury Department ought to read the report before they make comments, at least the spokesperson’s office,” Barofsky said. “Our methodology is laid out in black and white in the report. ... As far as the numbers being inflated, where do you think we got the numbers from? We got it from the Treasury Department, we got it from the Federal Reserve. ... If these numbers are inflated, it’s because they inflated them when they put them out in the public, not because of us.”
The inspector general defended the numbers outlined in his report, saying that all his team has done is to “gather the 50 programs, put them in one place, and told the American people what the government has said about the maximum of each of these programs.”
“Perhaps their criticism is that we dare to do math,” he said. He added that his team tried to convince the Treasury that they were wrong, and that recipients should be required to report on how they use the federal funds, and those should be shown to the American people so that they know it’s “not being thrown into a black hole.”
The government currently has about 50 different programs to fix the economy. Those programs include bailing out banks and automakers, and improving the housing market. Barofsky said the way his team came up with that figure is by looking at three different figures for each program.
“One, how much money is currently outstanding under the program. Two, what the high water mark has been since the inception of the bailout and then three, what is the total amount the federal government has said they’re willing to commit to each program. And at the end, we add them all up,” he explained. “That’s where the 23.7 trillion number comes from. It’s what the federal government has said would be the maximum number for each of the approximately 50 programs.”
Barofsky said “this recent attack on my report is really, in many ways, an attack on basic transparency -- of not wanting the American people in a certain way to see exactly what’s going on in their government as included in our report.” He said the Treasury Department “with respect to this program, they’ve not met their claims that this is going to be ‘unprecedented transparency,’” as President Obama suggested there would be.
We also spoke to Mr. Barofsky about whether taxpayers were misguided, on his independence being challenged by the Treasury and the personal toll of his job.
You can download the podcast on iTunes or listen to it HERE.
-- Jake Tapper and Huma Khan
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