Under what definition of news is the following not front-page news: the federal government cannot tell whether its spending $3 trillion well and effectively.
On Tuesday, the Senate finance committee held a hearing where three government watchdogs testified about the TARP program and other various corporate bailouts. Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, noted that the total amount of money being spent by the US government on TARP and other programs is $2.97676 trillion. (Yes, he was that specific.) And he noted that since government IGs typically worry that 10 percent of any given government program can be lost to fraud and waste, he's looking at potentially $300 billion worth of fraud.
That statement--a hypothetical warning--received media attention. But perhaps more alarming were the reports from the hearing that the feds are not doing all they can to monitor the bailout money they are throwing at various banks, insurance companies and other financial institutions. Barofsky said that in December he had proposed that "Treasury should require TARP recipients to monitor their use of funds and be required to provide certified reports to Treasury on how they are using taxpayer money." That sounds simple and logical, right? You get billions from the taxpayers, you state how you're using those billions. But that hasn't happened. Barofsky told the senators that this modest proposal has not been adopted.
More troubling was the testimony of Elizabeth Warren, who chairs the Congressional Oversight Panel that oversees TARP and the other bailouts. She offered several disclosures that ought to make a taxpayer flip his or her lid. Warren noted:
* that Treasury "has not given the public an explanation" for having overpaid by $78 billion when it bought up troubled assets from assorted banks last year and that "the appropriateness of the overpayment remains, at best, unresolved";
* that "without a clearer explanation from Treasury about its overall plan for each capital infusion, and without more transparency and accountability for how that plan was carried out, it is not possible to exercise meaningful oversight over Treasury's actions";
* that the Term Asset-Backed Loan Facility (TALF) program--which lends money to troubled banks--"appears to involved substantial downside risk and high costs for the American taxpayers, while offering substantial rewards to a small number of private parties":
* that "documents posted on Treasury's website describing the terms of operation of TALF and press reports about the content of those terms as they are to be implemented by the Federal Reserve Bank of New York are contradictory, promoting substantial confusion";
* that "until we receive detailed and accurate information, the Panel cannot perform its oversight function" and that "it is difficult for Congress and the American public to have confidence in [the TALF] initiative for which so much money is at stake and so little key information is available";
* that "the opaque nature of the relationship among AIG, its counterparties, the Treasury, and the Federal Reserve Bank, particularly the Federal Reserve Bank of New York, has substantially hampered oversight of the TARP program by Congress"
* that "Congress and the American public have no clear answer" to the question, what is Treasury's strategy for TARP?--and that she has sent two letters to Treasury Secretary Timothy Geithner asking for clarification on this point, without receiving a "substantive response."
That's a lot to process. The United States is spending $3 trillion on propping up Big Finance firms that have screwed up, and the money is not being followed closely and Treasury is not providing sufficient information to make effective oversight possible. And, by the way, there could be up to hundreds of billions of dollars lost to fraud. Seems like big news to me. Yet neither The New York Times nor The Washington Post placed any of this on the front page the day after. Are we just numb to the big numbers and details of the actual policies? The public, pundits, and politicians can get into a thick lather over the AIG bonuses (a paltry $165 million or so), but what about the inability to figure out if trillions of dollars are being spent in the right way? No biggie.
I did talk about this with David Shuster on MSNBC on Wednesday night:
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Comments
Great reporting David. Keep it up until it hits the mainstream press. Although shocking, not surprising. I wonder when Obama will wake up and get rid of Geithner and his cohorts and get some honest, capable people in to monitor what is going on.
Posted by: Pearlie
| April 1, 2009 12:07 PM
"neither The New York Times nor The Washington Post placed any of this on the front page the day after. "
Shutter the windows and close down those two worhtless rags.
These are the same papers that covered Bush's backside and got him into his second term because they held stories that would have topedoed him.
Posted by: capt
| April 1, 2009 1:09 PM
Not to mention the NYT's front cover did carry Glenn Beck.
I don't think they are doing themselves any favors when the Colbert Report can tear it up like this:
http://tinyurl.com/deortm
via DKos headline:
Colbert went where 'NYT' feared to tread on Glenn Beck
Posted by: capt
| April 1, 2009 1:36 PM
David,
Truly an issue on which liberals and conservatives can unite.
The Bush administration was completely hapless in its administration of the first TARP funds; it would appear that the Obama administration is following suit.
As I have stated on previous posts, as a 35-year veteran of small business dealings, something drastic is going to have to be done with the dealings of corporations. Every day I go to work, I risk not only what I have invested in my business, but my entire (very small) net worth, as I am personally liable for my company. That means that, if I make a bad decision, not only can I lose what I have in the business, but also everything I own. If a corporate CEO makes a bad decision, he simply receives a slightly smaller severance package.
Both the government and the private sector have destroyed capitalism. Capitalism is all about risk and reward. Corporations have removed the risk element for their managers.
Posted by: Tomcantu
| April 1, 2009 2:20 PM
Counting the GOP rats jumping ship?
It'd be funny if it wasn't so pathetic.
Posted by: capt
| April 1, 2009 3:54 PM
If 1% of the country now owns 28% of the assets, what percentage is that of the money left in the US to re-invest in the stock market, bonds and fancy derivatives? Does Obama have to play ball with the top 1% and their royal servants to consolidate his power as President before getting on to framing some real solutions to this mess? I think we'll see something from this week overseas how the international world wants to come together for new financial industry rules and shifting resources internationally for global development.
There's not really much mystery about where the $3 trillion went to. It went to the top 1%. If the shadow market is $76 trillion or $760 trillion of financial instrument bubble wealth --- what difference does another $3 trillion make? Senator Graham and ex-president W. did an amazing con on America and the whole global system. Crashing the economy was the coup-de-grace and a prelude to the next set of amazing profits when the 1% puts their money back in at rock-bottom stock values.
Outside the box approaches would pass a one sentence law setting home mortgage rates at 2%. Congress has the authority to regulate trade. Don't spend a penny. Just awake to your power.
Outside the box approaches would create a Green Credit Card for home insulation materials, solar hot air collectors, simple electric cars, and photovoltaic panels at a 2% rate. This is stuff worth borrowing for.
But we won't get around to solutions until the President consolidates his power. And like it or not, the basis of his power is the international support he can garner ---- to keep the Chinese buying treasury bonds and to show that international efforts towards climate stabilization, global development and peace need the leadership that he brings.
Posted by: Dr. Dan 2000
| April 1, 2009 9:51 PM
"And like it or not, the basis of his power is the international support he can garner"
Interesting, I had not thought about the international support implications and the huge impact it will have on our domestic issues.
Posted by: capt
| April 1, 2009 11:45 PM
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