The Treasury Department made headlines today announcing that 10 mega-banks will be allowed to repay their TARP funds. These banks—among them JP Morgan Chase, Goldman Sachs, American Express, and Bank of New York Mellon—will return an estimated $68.3 billion to the government’s coffers, almost triple what the Treasury initially estimated.
So what do Obama, Geithner, Summers, and the rest of the gang have in mind for that $68.3 billion? Well, according to Obama's remarks today, the government can save its money and spend it, too:
This [repayment] is not a sign that our troubles are over—far from it... But it is a positive sign. We're seeing an initial return on a few of these investments. We're restoring funds to the Treasury where they'll be available to safeguard against continuing risks to financial stability. And as this money is returned, we'll see our national debt lessened by $68 billion—billions of dollars that this generation will not have to borrow and future generations will not have to repay.
Huh? The $68 billion in repayments are apparently going back to the Treasury to "safeguard against continuing risks to financial stability." This is most likely doublespeak for TARP II, the newest round of bailouts that uses TARP repayments from healthier banks to subsidize the weaker ones. Yet at the same time it's subsidizing banks, that $68 billion is also going to reduce the national debt. This doesn't quite add up.
Obama's contradictory comments on the bailout also fuels the criticism that the government really doesn't have a coherent vision for the bailout, but instead sees it as a endlessly spinning revolving door for taxpayer money coming from and going out to struggling banks. Stay tuned here for more updates on the bailout, and where that $68 billion in taxpayer dollars is really headed.
(H/T Paul Kiel, ProPublica)