Thursday, October 28, 2010

Taxpayer wealth transfer to Wall Street: Government and politician claims that TARP funds have been "repaid" turn out to be fiction

From:
TARP Bailout Payback: "Drop in the Bucket"

(The New American) -- by Charles Scaliger --

Over the recent clamor of approval for the outcome of the Troubled Asset Relief Program (TARP), which Beltway insiders are proclaiming a success because of the high rate of repaid funds, a lone voice of comparative sanity reminded Yahoo! Finance’s Aaron Task that the Obama bailout has done far more damage than the government-massaged figures indicate. Nobel Prize-winning economist Joseph Stiglitz, who seems to understand finance and banking better than most celebrity economists, told Task that the monies paid back to TARP are “just a drop in the bucket compared to damage done to the economy.”

The money was loaned to the banks on very favorable, even preferential, terms that amounted to a government subsidy of the banking system, Stiglitz pointed out. “If the U.S. government had provided money to ordinary business at zero interest rates, what would our economy be like?,” Stiglitz asked. “What we did is give zero rates to banks, they then lent at much higher interest rates; that's the recapitalization. That's the gift.” He estimated that the damage done to the economy by hidden distortions stemming from TARP is in the trillions of dollars.

Separately, Neil Barofsky, special inspector general for the Troubled Asset Relief Program, claimed in an interview with the New York Times that TARP losses from the AIG bailout were $40 billion more than the government has reported. Whereas initial reports tallied the AIG bill for taxpayers at “only” $5 billion, Barofsky estimates that actual audited losses amount to $45 billion. The difference? Official government figures have relied not on actual balance-sheet data but on gauzy future “projections.” “The American people have a right for full and complete disclosure about their investment in A.I.G.,” Barofsky told the Times, “and the U.S. government has an obligation, when they’re describing potential losses, to give complete information.”...

The appetite for taxpayer-funded bailouts is insatiable in the financial sector. The Washington nomenklatura remains loyal to the big banks and other financials that feed their addiction to overspending, and is prepared to squeeze taxpayers dry rather than allow a Bank of America or Wells Fargo — or Fannie Mae and Freddie Mac, for that matter — to meet the same dolorous fate of hundreds of smaller, more honest, but less well-connected banks. Failure on Main Street is acceptable, it seems, but not (excepting Lehman Brothers) on Wall Street...MORE...LINK
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