TARP Chief Elizabeth Warren Says We’ll Never Know Where TARP Funds Went

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Elizabeth Warren is the person charged with overseeing the U.S. banking bailout, formally known as TARP.  (Formally known as TARP?)

In a recent interview with Aaron Task of The Economist, speaking on the proposed Consumer Financial Protection Agency, she said:

“The banks, big banks, always get what they want.  They have all the money, all the lobbyists. And boy is that true on this one. There’s just not a lobby on the other side.”

No lobby on the other side?  The “pro-Consumer Financial Protection Agency” side? Isn’t that the President of the United State’s side?  Does that side need a lobby?  Oh dear.  The President needs a lobby.

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Warren has absolutely no judicial or legislative authority whatsoever.  So, Liz is pretty much limited to tough talk, but we’re talking damn tough talk, so in a world where no one talks tough around the banking lobby, she gives me reason to believe that I have not lost my mind, and that one day the world will again make sense.

Warren, also in her recent interview with Task, said:

“This is a moment when all around the country people are saying we’ve had it about up to here with these large financial institutions that want to write the rule then take our money. I find it astonishing that they have the nerve to show up and say, ‘I’m a big financial institution. I took your money. And now I’m going to lobby against anything that might offer some protection to ordinary families in this marketplace.’”

When Task asked her about the recent flurry of bonuses being paid out by Wall Street firms, Warren said:

“I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it’s business as usual.  I don’t understand how they can’t see that the world has changed in a fundamental way – it’s not business as usual. All I can say right now is they seem to be winning this argument.”

Yes they do, don’t they?  Annoying, I for one would have to agree.  What shall we do about this, Liz?  If there’s a debate team forming, I’d sure like to try out for the team.

She also says that she thinks there’s NO CHANCE that we’ll ever get a full accounting of where our $700 billion in TARP money went.  NO CHANCE.  She says the reason we won’t know where our $700 billion went is because we didn’t ask to be told where the money would go in advance.  So, I guess we’re screwed then.  (Here she is describing the chances of our ever getting a real accounting of the money.)

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Elizabeth… damn it.  That doesn’t make any sense and you have to know that.  First of all, I would argue that you don’t have to ask in advance where your $700 billion will be going because IT’s $700 BILLION for one thing.  It’s implied that someone is supposed to keep track of it.  For another thing… well, they’re banks for heaven’s sake… they keep track of money for a living.  Why all of a sudden is keeping track such an onerous burden that it can’t possibly be overcome.

And third… how’s this: Keep track or one of three things happens: 1. You don’t get reelected.  2. We never bank with you again.  3. You go to jail for robbing the American taxpayer, whoever you are.  And we send you to Guantanamo to serve your sentence.

I bet then we could figure out how to keep track where our $700 billion might have gone.  Oh yes, Congress would be hopping around, bumping into each other in a bipartisan effort to pass whatever they could think of to satisfy our collective thirst for blood.

She goes on to point out that the toxic assets are right where they were a year ago.  She points out that the banks that were too big to fail are now bigger.  And she points out that even with unemployment having blown through all expectations used in conjunction with the banking stress tests, they haven’t been retested and the results of the tests remain as transparent as… well, as they’re not the least bit transparent, that’s what.

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Wrapping it up with a bow, she said:

“All the things going on [a year ago] that were serious, serious problems for the financial institutions seem to me are still serious, serious problems.”

I think you’re right, Liz, I think you’re absolutely right.

She has also chimed in on the housing crisis.  “We see things getting worse in the housing market,” Warren said recently,

She was referring to data published by RealtyTrac showing foreclosures increased 5% in the third quarter to a total of 937,840.

“The long-term impact of high foreclosure rates on our housing market and overall economy would be disastrous,” Warren warns, citing estimates that 10 to 12 million U.S. homes could ultimately go into foreclosure. “We have to get foreclosures under control.”

Warren says that it’s now estimated that a single foreclosure property brings prices down an average of $5000 for every house in a two-block radius and costs investors an average of $120,000, she says.

Wow.  Those are some eye opening numbers, I’ll say that for them.

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Elizabeth has also been very critical about Treasury’s efforts to stop the foreclosure crisis, saying that it’s…

“… targeted at the housing crisis as it existed six months ago, rather than as it exits right now.”

As for the “moral hazard question,” or in other words should the government be bailing out homeowners, Warren says:

“I’m passed that, there’s plenty of unfairness to go around.”

More importantly, “ultimately the American taxpayer — thanks to Fannie, Freddie and FHA — is going to stand behind many of these mortgage,” she says. “We need to be thinking more globally what is cheapest possible way to bring this crisis to an end.”

She brings up one solution: Force investors to take a haircut, as occurred with creditors at GM and Chrysler, she points out.

“That’s why they call it investing,” Warren says. “You make profits in good times, take losses in bad times. That’s the fundamental part of this [modification effort] that’s missing.”

Again, I believe she has something there.  Take a look at her video interview with Mr. Task by clicking on the links below… it’s totally worth it.  She may not have any actual power, but she’s more than merely feisty and smart as a whip, so I like her.

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“Astonishing” What the Banks Are Doing Today, Says Warren

Warren: Housing Crisis Worsening

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