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Things are not great in “TARP” land, at least according to the “watchdog” Inspector General Neil Barofsky. Mr Barofsky gave Congress his quarterly report on TARP and said the Treasury Department of the “most transparent administration in American history”  was instituting the Troubled Asset Relief Program without transparency. He also said the standards set up for measuring the impact of the Home Affordable Modification Program (HAMP) was bogus, and the program did nothing “more than subsidize activity that would have occurred in its absence is not an efficient or effective use of taxpayer dollars” Not surprising testimony for those of us who have been following the plan, but also not something you will read about in the mainstream media.

Previous reports have also bashed the Treasury for the lack of transparency but nothing has been done to correct the problem. Amongst the critical comments made by the IG were:

  • “The current outstanding balance of overall Federal support for the nation’s financial system … has actually increased more than 23% over the past year, from approximately $3.0 trillion to $3.7 trillion – the equivalent of a fully deployed TARP program, largely without Congressional action – even as the banking crisis has, by most measures, abated from its most acute phases.” (p.5)
  • Treasury has either refused to implement or only partially implemented 20 of Barofsky’s recommendations for basic transparency and accountability in the operations of TARP. [CH – This mismanagement leaves the program less transparent, less accountable, and more susceptible to waste, fraud, and abuse.] (p.183-190)
  • “Treasury has already jumped into the deep end of the moral hazard pool through TARP in general.” (p.175-76)
  • “Unfortunately, HAMP continues to struggle to achieve its original stated objective, to help millions of homeowners avoid foreclosure ‘by reducing monthly payments to sustainable levels…’[T]he number of homeowners helped through HAMP through permanent modifications remains anemic … and HAMP has not put an appreciable dent in foreclosure filings.” (p.6)
  • “One continuing source of frustration is that Treasury has rejected calls to announce publicly any goals or performance benchmarks for HAMP or its related initiatives concerning how many homeowners it actually expects to help stay in their homes, despite repeated recommendations that it do so from SIGTARP, the Congressional Oversight Panel and the Government Accountability Office (“GAO”).” (p.6)
  • “Instead, Treasury clings to its prior statements that it plans to offer trial modifications to three to four million homeowners, a measure that SIGTARP has previously shown to be essentially meaningless. Treasury’s refusal to provide meaningful goals for this important program is a fundamental failure of transparency and accountability that makes it far more difficult for the American people and their representatives in Congress to assess whether the program’s benefits are worth its very substantial cost.” (p.6-7)
  • “The American people are essentially being asked to shoulder an additional $50 billion of national debt without being told, more than 16 months after the program’s announcement, how many people Treasury hopes to actually help stay in their homes as a result of these expenditures, how many people are intended to be helped through other subprograms, and how the program is performing against those expectations and goals. Without such clearly defined standards, positive comments regarding the progress or success of HAMP are simply not credible, and the growing public suspicion that the program is an outright failure will continue to spread.” (p.7)
  • “First, American taxpayers and their representatives in Congress have an absolute right to know what the Government’s specific expectations and goals are for using the $50 billion that will be added to the national debt as a result of this program.” (p.174)
  • “Treasury’s continued refusal to provide benchmarks for itself leaves it vulnerable to accusations that it is simply trying to avoid accountability. If Treasury sets no meaningful goals, it cannot be held accountable for failing to meet those goals and instead can continue claiming each incremental increase in participation a success, irrespective of the program’s cost or whether it could have been designed to help more homeowners.” (p.174)
  • “There is a growing consensus that re-defaults will indeed be a problem in HAMP.” (p.177)
  • “Simply put, a Government program that does no more than subsidize activity that would have occurred in its absence is not an efficient or effective use of taxpayer dollars ….” (p.178)

After months of delay, the Senate passed today an extension of unemployment benefits. The delay was caused by a GOP desire to fund the measure from left over TARP funds.  Based on Inspector General Neil Barofsky’s report, using the money for unemployment would have been a much better use of taxpayer dollars.

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