Blah, blah, blah

head_left_image

TARP Fraud

While Larry Kudlow is not afraid to turn weeds into mustard seeds, I will give him this, he's also not afraid to call bull on what is taking place with TARP.

In his latest bog post Kudlow illustrates how Special Inspector General Neil Barofsky's report into TARP has "opened 20 criminal probes into possible securities fraud, tax-law violations, insider-trading, and mortgage-modification fraud related to TARP."

Barofsky's report states that TARP is, "inherently vulnerable to fraud, waste and abuse, including significant issues related to conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering."

Barofsky, according to Kudlow, goes on to say that, "what started last October as a single-purpose $750 billion effort to buy toxic securities has morphed into twelve separate programs that cover up to $3 trillion in direct spending, loans, and loan guarantees. In other words, TARP is nearly equal in size to the entire federal budget."

And if you think TARP is vulnerable to fraud and collusion, you haven't seen anything yet.  The Public-Private Investment Program (PPIP) which will help remove toxic (non-performing), now "legacy", assets from banks balance sheets, is right around the corner.  The new program is designed to leverage, with the help of the Federal Reserve, an estimated $100 billion in TARP funds into between $600 billion and $1 trillion in loan guarantees backed by the FDIC.  It will allow banks to purchase other banks toxic assets with the tax payers on the hook. 

What the PPIP really does is allow banks to sell their toxic assets for more than they are worth while at the same time allowing the same banks to be able to purchase other banks' toxic assets with government (tax payer) guarantees.  The result of course will be that banks will make enormous profits, credit will remain tight, and the American tax payer will continue to be "taxed" without representation in Congress. 

 

Comment balloon 0 commentsKevin Robinson • April 29 2009 05:32PM

Comments

Participate