TARP readied as revolving $700 billion slush fund
by Bob Hoig, Publisher
Midlands Business Journal
The Troubled Asset Relief Program (TARP), which has seen its own share of troubles, was back in the spotlight this week.
In its new role as unclaimed Obama property, it is suspected by some, including this writer, as being teed-up as a $700 billion slush fund for politicians and power brokers leading to the November mid-term elections.
If even the House of Representatives falls to the Republicans, Obama’s version of hope and change goes down the drain.
It seems the Tarp money repaid by the banks was to be returned to the Treasury for debt reduction.
Interestingly, even with a $14.3 trillion deficit for 2011, that apparently is not the way President Obama sees it. He thinks it belongs to him to spend on projects he wants.
The nice thing for Obama and his allies in the Democrat-controlled Congress is that the money has been approved and there would be no need to submit $700 billion in new spending proposals in an election year.
The first project, announced this week, was certainly worthwhile — $30 billion for community banks to loan to small business.
But the format is ominous and reeks of the many of the we’ll pay, you play ball moves associated with the very tricky ObamaCare.
TARP started as an “offer you can’t refuse” program by the Treasury Department late in the Bush Administration when the economy was headed into free fall.
The idea was to help big banks through creation of a giant fund, borrowed from the Chinese and others, to get risky mortgage-backed securities off the banks’ books.
The banks were to take the money for mortgage loan relief, a use which ironically, some are contending never was applied although the loans did go for other purposes.
The banks were to repay the borrowings, with interest, and along the way, surrender some of their ownership shares to the government.
Except now, what to do? Obama has the money and is working through Director Peter Orszag of the Office of Management and Budget that it is the Administration’s money to use as it sees fit.
Billions for small business is a worthy cause — one conspicuously overlooked by the Obama White House from the beginning.
Beyond that, it does not take a lot of imagination to guess how a politically-motivated president, acting only according to his own lights, could spread a lot of political juice around leading to the mid-term elections in November.
Obama showed himself a master of negotiation — a la the Nebraska Kickback — in which a politician, in effect, is induced, the less fragrant word is bribed, by promises of money to his state to cast the decisive vote for ObamaCare.
The president dangled special treatment in exchange for advertising dollars and pledges to rally behind ObamaCare in front of pharmaceutical, hospital, physician and health care insurance groups and possibly others.
However all of this worked out, it is safe to say all undoubtedly came away sadder but wiser in the ways of this most compliant of administrations.
Examining TARP on camera, Judge Andrew Napolitano, a former judge in New Jersey and Fox News commentator, called it a “blank check” from the beginning.
“Government got the $700 billion and didn’t buy a single toxic mortgage asset,” he said this week on Fox.
“Instead, it forced that cash to the 60 largest banks in the country and said take our money and sell us shares of your stock or we will audit you and the audits will cost you a fortune.”
Napolitano complained that now, with most of the money repaid, the Obama Administration has the $700 billion in a bank account and wants to be able to spend it as it wants.
An even feistier critic is New Hampshire Sen. Judd Gregg, ranking Republican on the Budget Committee, and coincidentally, the man who wrote much of the law.
He dueled with Orszag at a Senate committee meeting this week.
In one heated exchange, Gregg read from a paragraph in the law commanding that the repaid TARP funds “shall” go back into the Treasury to reduce the deficit. When Orszag argued whether “shall” was in the law, Gregg read it to him, adding: “I wrote it.”
Gregg’s point was that TARP dollars should not be used as a piggy bank for President Obama’s projects, no matter how good they might be, or not..
February 5, 2010
