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 yearâ€¦ 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.Â But, I donâ€™t remember Congress debating anything this past year about giving the banks an additional $700 billion, do you?Â Was I out sick that week? Â 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 governmentâ€™s futile attempt to prop up the housing market by purchasing Fannie Maeâ€™s and Freddie Macâ€™s securities, and guaranteeing mortgages through the FHA, VA and Ginnie Mae.
So, when Treasury Secretary Tim â€śTransparencyâ€ť Geithner said a month or two ago that weâ€™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? Â No, I guess he wasn’t.
That is so cool.
Going forward, however, Treasury has been limited to $475 billion in TARP spending, and isÂ not allowed to take on any new TARP obligations. Â In fact, Treasury now says itâ€™s shrinking several programs and dropping $30 billion that was supposed to be for small business lending.Â Assistant Secretary Herb Allison says the current estimate of $105 billion is â€śconservative,â€ť but why anyone would believe what Allison or anyone at Treasury has to say, is beyond me.