Where did the Tarp Money Go?

I argued against TARP and was upset when it was approved. So far, roughly half the money has been doled out and I did some research as to where it has gone and how it has been used.

There is an excellent report on the internet. It shows who got what so far, roughly 300 billion has been given out. This report is at http://www.propublica.org/special/show-me-the-tarp-money

So we can see who got the money, but how has the money been used? No one knows! The GAO has written a report stating that unless the Treasury steps up efforts to monitor where the money has been used, that in general, the institutions consider the money fungible, meaning it can blend in and be hard to track, and at least one institution publicly has said they won't keep track of its use separately, meaning it could actually be used to pay manager's bonuses.

What? I thought there would be penalties against this? It turns out, according to a fellow blogger in his article on this, http://www.dubrawsky.org/wordpress/?p=172, that a last minute rule change was made by the Oval Office, and that the penalties for paying executive bonuses would only apply if banks sold toxic assets to the Treasury. But if they didn't sell toxic assets, there was no restriction on bonuses, in fact no restrictions on the use of the money at all, and it could be kept secret, and Paulson would not be held criminally liable for doling out the money!

So that explains why Paulson had the Treasury buy preferred stock from the banks instead of buying their troubled assets, because then legally the banks could do whatever they wanted with the money. Which the GAO says they are powerless to find out because the law didn't require reporting, because it was crafted originally to only buy TARP assets, but was changed at the last minute!

So was it changed and the congress voted on it again and no one read the bill the second time around? Or was it approved and then the President changed it? My bet is that no one bothered reading the amended bill and no one caught this enormous loophole because from what I know of the law, the President can't change the wording of a bill, just sign or veto it. Regardless of the mechanism, this borders on the criminal, even if it was all done properly and legally.

Are you upset? I am! This is $300 Billion of our money! And you know what I think happened to most of the money? Here's the trail I suspect. Treasury gives Bank $40 billion and Treasury gets preffered stock, which has no voting rights and no assurance of paying a penny back to Treasury, meaning, if the Bank had given Treasury a couple rolls of Charmin instead of preferred stock, it would have given us something of value!

Bank takes money and buys... Treasury Bills! Safe investments, they loaned it back to us, the people that gave it to them all in a panic to save them from owning toxic assets, (which the Banks were not forced to invest in in the first place mind you, they took a risk and lost, so we, well, we said, oh no that's awful, rich guys can't go broke, and just gave them money).

So the bank invests their $40 Billion at 3% in T bills and that gives them a tidy $1.2 Billion in income. Guaranteed!With safe profits coming in, I'm sure the executives will get their bonuses and salaries! No work involved in the messy business of helping people avoid foreclosure, just one call and the money is safely tucked away with the Federal Government guaranteeing interest payments.

This is what I think happened. That's why nothing has happened with home mortgage rescue and the economy. The banks loaned it back to the Treasury, i.e. us, and now we're paying interest to the Banks on the money they were given.

I can't prove that this was how the money was used, but no one can prove how the money was used at all, according to the GAO.

Write to your congressman. Maybe something will happen with Obama now in office, although from what I have seen in life, it's a little difficult to become unraped after the event.