If you are the type of person who starts flipping out every time you think about TARP program and what its done to the federal deficit stop reading now, because this will make you bleed from your ears.
Issued today, the Congressional Oversight Panel’s August oversight report, called “The Global Context and International Effects of the TARP,” shows that tens of billions of TARP dollars went overseas, and just like the the dollars spent here, they did little to stop the global slowdown. Also while the US gave money to international banks, where the money could flow overseas, our allies made sure that money from their TARP equivalents stayed in their own countries. In other words we funded the bank rescues of OTHER countries:
While the United States attempted to stabilize the system by flooding money into as many banks as possible – including those that had significant overseas operations – most other nations targeted their efforts more narrowly toward institutions that in many cases had no major U.S. operations.
As a result, it appears likely that America‟s financial rescue had a much greater impact
internationally than other nations‟ programs had on the United States. This outcome was likely inevitable given the structure of the TARP, but if the U.S. government had gathered more information about which countries‟ institutions would most benefit from some of its actions, it might have been able to ask those countries to share the pain of rescue. For example, banks in France and Germany were among the greatest beneficiaries of AIG‟s rescue, yet the U.S. government bore the entire $70 billion risk of the AIG capital injection program. The U.S. share of this single rescue exceeded the size of France‟s entire $35 billion capital injection program and was nearly half the size of Germany‟s $133 billion program.
That fun news came the same day we found out that new unemployment claims are growing at a faster rate than expected, foreclosures are up 6% and the day after the treasury announced they are going to revise the US Economic growth forecasts downward.
CATO Institute budget analyst Tad DeHaven tells Newsmax: “The economy has become increasingly global, so it’s not shocking that TARP bailout money ended up at foreign financial institutions. Nonetheless, bailing out U.S. financial firms was bad enough — that foreign institutions also benefitted from the largesse just adds insult to injury.”
J.D. Foster, senior economics fellow at The Heritage Foundation, said: “The overwhelming force slowing the economy down now is a lack of confidence among American businesses and consumers. The primary reason for that lack of confidence is the policies out of Washington seem completely out of touch with that reality.”
That reaction follows Thursday’s report from the Congressional Oversight Panel report that, when the United States injected hundreds of billions of TARP money to stabilize the U.S. financial system in September 2008, it also bailed out more than 40 major institutions based overseas that had invested in collateralized debt obligations and mortgage-backed securities.
But, as Billy Mays used to say, There’s More. The money was given out so haphazardly, we haven’t the foggiest idea where the money went.
“There were no data about where this money was going,” Elizabeth Warren, head of the panel investigating the bank bailout, explained in a conference call with reporters on Wednesday. “The American people have a right to know where the money went.”
The TARP money flowed to overseas banks largely because of their investment in AIG, which received about $182 billion in federal bailout funds. Roughly half of the 87 banks and investment firms who would have lost billions without the AIG bailout were headquartered overseas, the Oversight Panel reports.
Between TARP and the Porkulus, the US spent almost $1.6 TRILLION Dollars on trying to turn around the economy but we are still stuck in a failing economy, with near record high unemployment, the only effect of that $1.6 trillion is our federal debt is now spiraling out of control.
“TARP was a waste of money and should never have been implemented,” Diana Furchtgott-Roth, director of the Center for Employment Policy for the Hudson Institute, tells Newsmax. “Rather, the funds should have been spent on tax cuts to stimulate the economy.”
Just imagine where we would be now if instead of bailing out failing businesses, much of it overseas, we bailed out the American people by letting them hang on to their own money through tax cuts. We would probably be in a real recovery.