The TARP fiasco: (3) big TARP sins the government never told you. Big banks stealing from you.

UYGUR: News was announced recently that the big banks have paid back the $250 billion in TARP money that they‘d originally taken from taxpayers. So a lot of people put up a flag saying, Hooray, mission accomplished.

They hung the banner. TARP was a success.

Again, I hate to break it to you, that‘s not the reality. And let me show you why that‘s not the case. So look, there were dozens of ways that money was funneled to the banks outside of direct cash infusions, and the Treasury Department doesn‘t want to tell you about that because it‘s inconvenient. I can give you so many examples, but let me just give you three egregious examples and you‘ll see what I‘m talking about.

Originally, $475 billion of TARP went to insurers, auto companies and borrowers. Now, a lot of that money was funneled through the banks—to banks, I should say, through companies like AIG. So that was what they called a back-door bail-out. So now you want to know how much of that has not been repaid? $187 billion. So when they tell you all the money came back, it‘s not true. $187 billion in back-door bail-outs is still out there and hasn‘t been repaid.

Second, the Fed took over $1 trillion in government-backed mortgage securities from the banks. Those were the toxic mortgages. In other words, the banks unloaded their worst assets onto us, and not just a little bit, a trillion dollars! They didn‘t want to tell you about that part, right?

Now, look, principled conservatives and progressives like Ron Paul, Alan Grayson and others fought tooth and nail to make sure that we didn‘t have that kind of financial trickery coming out of the Fed. And this shouldn‘t be a political thing. It shouldn‘t be a partisan thing.

Now, but the third part of all of this will drive you absolutely crazy. Acting Assistant Secretary Timothy Massad has just admitted that the banks used small business lending fund to repay their federal bail-outs.

What does that mean? Look, that‘s the banks paying back the federal government with federal government money. They take what was supposed to go to small business lending, and they, Oh, thanks a lot for giving me that money, now I‘m going to pay back the bail-out. Well that‘s our money! You‘re just paid us back with our money! I mean, it‘s a joke! It‘s a joke.

And the extra kicker is that small businesses didn‘t get those loans so they could hire you and we could have the economy improve again and unemployment go down. So the banks diverted the money that was supposed to create jobs to paying back their own bail-outs.

Look, don‘t take my word for it. Neil Barofsky, who‘s the special inspector general for TARP—so he‘s the guy who was in charge of making sure they did it right—says they didn‘t do it right. He said that allowing the banks to do all this, not regulating them effectively after the crash and not attaching any strings to those bail-outs could lead to, quote, “disastrous consequences.” That was his parting warning as he left this week.

And one more thing. Doesn‘t it strike you as a little weird that Republicans almost never complain about Tim Geithner, even though the economy is the largest issue and he‘s the Treasury Secretary? And did you notice that the Tea Party, which was originally formed because of anger about the bail-outs, has never done one protest at the Treasury Department or a single protest at Wall Street. So how does that make any sense? If you‘re angry about the bail-outs, why didn‘t you do that?

It‘s funny how the one thing that professional politicians and the people who are funding the Tea Party all agree on, whether they‘re Republicans or Democrats, is that the banks must always be protected. So don‘t believe the hype.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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One Response to The TARP fiasco: (3) big TARP sins the government never told you. Big banks stealing from you.

  1. billyc says:

    And did you notice that the Tea Party, which was originally formed because of anger about the bail-outs, has never done one protest at the Treasury Department or a single protest at Wall Street. So how does that make any sense? If you‘re angry about the bail-outs, why didn‘t you do that?

    As you said, Ron Paul and Alan King tried to do that and where told by Bernake that he didnt know which banks got the money.

    I believe that the TEA Party should exert all their efforts on congress replacing the ones that have a fatten their nest for years of being in DC with constitutional minded ones to undo the mess that has been made their since 1912.

    CPA’s love certified documentation, what can they love about this?

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