While we slept: Remaining $350 Billion to be tapped
While we slept the Bush administration coupled with the Obama transition team worked to push the remaining $350 Billion of the TARP program through Congress. Dealmaking is being done but apparently the cash will hit the bank right as Obama takes office, not only giving him his first goal as president but also his first challenge.
Obama has been a critic of the TARP program after blaming a lack of oversight and other regulations to be a fatal blunder to the program which has already spent through its original $350 Billion. With better accounting practices Obama believes the program can be more productive than with the first $350 Billion.
Many, including myself, never thought the second half of the TARP funds would ever be released. Under Bush and Paulson, the bailout funds were distributed irregularly and without any clear goals other than to keep some (but not all banks) from collapsing. Those deemed “too big to fail” were given credit to cover operating expenses while smaller banks such as IndyMac and even larger banks like Lehman brothers were randomly allowed to fail.
It will be interesting to see what changes Obama and his staff deem necessary for TARP and how funds are distributed in an Obama administration. Much of the failure of the TARP program, in my opinion, is how funds are distributed. There is no standard or system to how much money is allocated and at what rate nevermind who should receive it in the first place.
We’ve yet to even see what the first $350 Billion was able to do. None of the companies that received the bailout funds are in a position to repay, and very few banks are actually generating a profit. It should come to the concern of American citizens that for $350 Billion, all we’re really seeing are lower mortgage rates.
