Goodbye To TARP, But Good Riddance?

From Forbes.com:

The Troubled Asset Relief Program expires Sunday, meaning the Treasury Secretary can commit no more funds from the bailout legislation Congress passed two years ago.

Since then, the TARP, which gives the Secretary enormous power to spend up to $700 billion in basically any manner he pleases in order to buttress the economy, has been reviled as the mother of all bailouts. Among other things, it has been used to assist banks and insurers, bail out General Motors and Chrysler, and solve America’s foreclosure problem. It kicked off the anti-government spending movement, which has culminated in the success of many Tea Party candidates this year.

To be sure, TARP has had its faults, including a lack of transparency, failure to fix the housing market and mission creep. (It was supposed to be used to relieve banks of toxic assets, remember?) Read any of watchdog Neil Barofsky’s quarterly reports to Congress for an accounting of them.

But was TARP such a bad idea? Increasingly, it’s looking like the answer is “no.” The Treasury Department now estimates that losses to the economy from the TARP will be $50 billion at worst. By any measure, that’s a lot of money, but it’s not anywhere close to the $700 billion that TARP opponents have argued that taxpayers are responsible for. In fact, not even $400 billion in TARP money has been spent. From The New York Times Friday:

Whatever the final losses from housing, auto companies, A.I.G. or smaller banks, those will be offset by taxpayers’ profits from the big banks that have been the focus of their ire since 2008.

They have repaid their loans and Treasury has collected about $25 billion more from dividends and proceeds from the sale of warrants held as collateral, officials say. Many smaller banks hold on to their loans, however, reflecting their weakness and the desire of some others to keep the money given its advantageous terms. Scores are behind on dividend payments to the Treasury.

Geithner Says A.I.G. Rescue Prevented a Depression

Treasury Secretary Timothy Geithner spent several hours being questioned this morning, on the government’s actions during and after the bail out of American International Group (AIG). Geithner said that the decision prevented another great depression and – despite what it looked like – was made to protect the American people.

According to a New York Times story, the committee did not seem impressed with his answers and spent a decent amount of time questioning the Treasury Secretary. You can read a segment of the piece below.

Mr. Geithner said he was not involved in the decision to withhold information about deals that sent billions of taxpayer dollars from the bailout of A.I.G., the insurance giant, to big banks.

“I withdrew from monetary policy decisions,” Mr. Geithner said, “and day-to-day management of the New York Fed.”

The committee called Mr. Geithner, former Treasury Secretary Henry M. Paulson Jr. and other officials to explain, once again, the confounding results of an $85 billion rescue loan made to A.I.G. in September 2008. The loan sheltered big banks from any losses, but saddled A.I.G. with a debt so crushing that the Treasury soon had to step in and provide even more rescue money. Mr. Geithner was the president of the Federal Reserve Bank of New York in September 2008, when the first rescue loan to A.I.G. was extended.

After Mr. Geithner’s statement, the questions focused almost immediately on trying to determine why those negotiating on behalf of the taxpayers did not push the banks to make concessions, like returning the collateral to A.I.G. or accepting less than full value for their contracts with the insurer.

Obama's Treasury Secretary Owed $26K in Taxes, but it's OK

From LATimes.com:

Uh, it seems that Democrat Barack Obama's secretary of the Treasury-designate owed something like $34,000 in back taxes when he was picked to head the nation's financial system.

Uh, it seems Timothy Geithner owed the back taxes because the would-be member of the president's new Cabinet employed a housekeeper who became an illegal immigrant while working for him. And Geithner did not pay self-employment taxes for several years until the IRS audited him.

It seems the Obama transition team discovered the back taxes while researching the nominee, unlike the federal grand jury investigation of now former would-be secretary of Commerce-designate Bill Richardson.

It seems that such legal problems have derailed would-be Cabinet members in the past -- think Zoe Baird and Kimba Wood for Bill Clinton and Linda Chavez for George W. Bush.

It seems that Obama spokesmen are calling the nonpayment of thousands of dollars in back taxes for years a minor thing. One news report described it as "a speed bump." Sam Stein over at HuffingtonPost calls it an "embarrassing public relations headache" but really a mistake "quite common in nature."

For a secretary of the Treasury? A Federal Reserve president? Somebody who, now that Bill Richardson is stuck in Santa Fe, is gonna mastermind the economic recovery?

Oh, and for someone whose department includes the Internal Revenue Service?

It seems that the Obama team's talking points focus on the words "honest mistakes."

Incoming White House press secretary Robert Gibbs says of Geithner, "He's dedicated his career to our country and served with honor, intelligence and distinction. That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."

…

So you're a bank president walking out of the store with a $34,000 candy bar you did not pay for. A large person with a gun points that out. So you pay the $34 Gs. And that makes it obviously unintentional and an "honest mistake"?