Barofsky’s Report: Taxpayer Support for Financial Sector Now $3.7 Trillion
Neil Barofsky, Special Inspector General for the Troubled Asset Relief Fund (TARP) has issued a report that shows that taxpayer support for the financial system grew by $700 billion last year, and has now reached roughly $3.7 trillion, including TARP, Federal Reserve programs, asset guarantees and federal bank deposit insurance, among other commitments.
Taxpayer support grew by $700 billion last year… that is to say, last year alone taxpayer support of the banks increased by the same amount as the original TARP cost in the first place.
I remember the debate over the original $700 billion TARP like it was yesterday. But, I don’t remember Congress debating anything this past year about giving the banks an additional $700 billion, do you? Was I out sick that week? I’m sure I would have remembered the $3.7 trillion number, even with the flu.
A significant portion of this colossal increase in taxpayer support was the result of the government’s futile attempt to prop up the housing market by purchasing Fannie Mae’s and Freddie Mac’s securities, and guaranteeing mortgages through the FHA, VA and Ginnie Mae.
So, when Treasury Secretary Tim “Transparency” Geithner said a month or two ago that we’ve been paid back $300 billion in TARP funds as if it was good news and a sign of progress… he wasn’t exactly telling us the whole story, now was he? No, I guess he wasn’t.
That is so cool.
Going forward, however, Treasury has been limited to $475 billion in TARP spending, and is not allowed to take on any new TARP obligations. In fact, Treasury now says it’s shrinking several programs and dropping $30 billion that was supposed to be for small business lending. Assistant Secretary Herb Allison says the current estimate of $105 billion is “conservative,” but why anyone would believe what Allison or anyone at Treasury has to say, is beyond me.