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OpEdNews Op Eds    H2'ed 3/25/10

Thievery on an Unprecedented Scale, or Just Temporary Delusions on Wall Street?

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Troubled Asset Relief Program chief Neil Barofsky noted in his recent report that one of his initial recommendations was that the "Treasury require all TARP recipients to report on the actual use of TARP funds. However, the Treasury Department has declined to adopt this recommendation, calling any such reporting "meaningless.'"

Treasury's objections, says Barofsky, are preposterous. Banks can easily be made to disclose how additional (TARP) funds affected their decision-making. The purpose of Treasury's obduracy, in its failure to insist that banks disclose what they do with the money, is in effect to cover-up the fact that a large number of banks have:

a) contracted their lending,

b) raised fees and interest rates on consumer loans, and

c) pursued policies that run dramatically against the needs of society.

MSNBC's Dylan Ratigan's assessment of this cover-up: "What we have here is a captured government, working in collusion with certain banks, as a predator on the people."

Barofsky's investigation found that, of the 300 banks surveyed, 20% did not increase their lending after receiving federal funds, but directed this additional (bailout) money to other purposes. The report further notes that the Special Investigator's office is currently investigating 35 cases of fraud and corruption in relation to the TARP program.

Barofsky also noted that Treasury continues to deny appeals to begin reporting the values of its bailout asset holdings, both in relation to the TARP and the Public-Private Investment Program (PPIP). http://money.cnn.com/2009/07/08/news/companies/ppip/index.htm.

The report further notes that, from its inception, "conflicts of interest and collusion vulnerabilities were inherent in the design of PPIP," since the businesses assigned to value illiquid assets would in many cases be the same ones receiving federal subsidies, thereby resulting in an incentive to assign improper values the securities in question.

The report repeats allegations that "Treasury is using TARP to pick winners and losers and that, by granting certain firms PPIF (Public Private Investment Fund) manager status, it is benefitting a chosen few -- at the expense of:

a) the dozens of firms that were rejected,

b) the market as a whole, and

c) the American taxpayer."

But none of this is an accident. Rather, it is a well documented fact that politically connected banks and investment firms, such as Goldman Sachs, have, at taxpayer expense, utilized the bailout to drive out their competitors and consolidate their monopoly over the financial system. Again, Dylan Ratigan's assessment comes to mind: "A captured government, working in collusion with certain banks, acts as a predator on the people."

"Our" government is using the program's lack of transparency to hide the fact that it is giving certain banks a free pass now that they have returned to profitability. Another oversight body for the TARP, the Congressional Oversight Panel, found this month that the government was receiving only sixty cents on the dollar from banks seeking to repay their obligations to the government, and then the debt repayment was being called "good.'

The Barofsky report's estimate of the bailout's ultimate cost, $23 trillion, is mind-boggling. It amounts to almost twice the total Gross Domestic Product of the whole United States! In other words, an amount of value equal to the product of almost two year's labor done by all American workers . . is in the process of being directly (much of it permanently) transferred to these banks! To put this figure in perspective, the government's total outlay for discretionary spending, which includes allocations for education, food and nutrition programs and housing and urban development, is less than $1 trillion a year less than 5% of the money that is being given to the banks.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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