GAO: Treasury's Vision for TARP is "Unclear"

Submitted by Francesco Sinibaldi (not verified) on January 31, 2009 - 12:05pm.

Something new in my heart.

I'm going to
believe that
everything shines
in the light
of a footprint,
with a loving
desire, in the
sound of the
darkness.....

Francesco Sinibaldi

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Submitted by aikanae (not verified) on January 31, 2009 - 3:20pm.

From my understanding, the Feds usually make their moves well known in advance to large institutions - largely because it's not nice to leave folks hanging with billions of dollars worth of investments left on the wrong side of the track with market and interest swings.

Yet, based on this, that's exactly what the feds have done. That could make even a good economy bad.

Geesh. Everyday I read something that makes these guys scarier and scarier. Maybe it is time to bite the bullet and nationalize banks. I wouldn't want to fall into Iceland's footsteps.

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Submitted by Real Reform, Please (not verified) on January 31, 2009 - 3:20pm.

Gee..., maybe Congress should actually spend some time considering massive spending bills before they vote on them. Say..., take five minutes or so to analyze their potential impact, and whether they're going to achieve their stated goals? Look at whether there are stipulations and safeguards built in to prevent unelected bureaucrats from turning the new money & spending power to purposes other than those intended?
Maybe even let the public see what the bills contain, and give us some time to make comments to our Reps about them before they hold a vote.

But hey..., everything is a crisis, and there's no time to Think! There's only time to Spend!!

Delay is preferable to Error.
--Thomas Jefferson--

P.S. - Francesco, I think you've mistakenly bookmarked a political discussion site on your browser, marking it as: The Poetry Corner.

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Submitted by Jay (not verified) on February 1, 2009 - 11:48am.

I'm starting to wonder to what degree politicians' decisions are based on fear (I say degree to include the fact that some are lobbied to make a decision). What I mean is that they fear the perception that they are not doing enough or at least something. This is analagous to not criticizing outrageous military expenditures due to the fear of being seen as unpatriotic. Or the fear of being seen as soft on crime (take the police tactics at the RNC for instance).

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Submitted by Sam (not verified) on February 2, 2009 - 11:34am.

It seems there's less talk about how to rekindle America's belief the crisis has stabilized (hit bottom)...how to convince us we're now back on track and on the up and up. The banks were supposed to take the TARP infusion to stay afloat, but also to lend money at obscenely low rates based on the Federal Reserve rates dropping to near zero. These rates were to help people refinance so their payments were in line with payments now made on the much lower values of the same homes. I.E., offer lowest rates for the hardest hit, thereby keeping them in their homes to stabilize the sliding real estate market. Unless I'm mistaken, this devaluation of homes was (and is) the main culprit causing the severity of this downturn.

OK... So what if banks actually did lend money out at 2 or even 1 percent...or even a half percent (a quarter percent more than they're getting it for), depending on the specific loan need. Banks used to review their client's abilities to pay, and the criteria for the refinance loan rate was made accordingly. If a home is worth half, the interest rate could be lowered so the monthly payment isn't so out of line with the newcomer buying the house next door. Penalties for default need also be strengthened to prevent foreclosure as an option.

Even making loans at only half percent more than the Federal Reserve rate...what does it take for a bank to service a loan now? I recently looked into refinancing our home...the banks now require an automatic electronic monthly transfer of funds from an account you've got with them. This means one (yes, 1) IT person handling a bank of computers is all that's needed to service thousands of loans. The space and cost for this operation is MINIMAL.

What I'm aiming at...the Govt. COULD set up a system where:
1. Foreclosing on a home becomes foolish...assuming rules are set up where:
a. foreclosure (or bankruptcy) means you couldn't get another loan for at least 10 years. No if's, and's, or but's...
b. foreclosure wouldn't mean you'd be paying any less for a roof over your head (renting, owning, whatever...)
--instead you'd have the RIGHT to a loan that would put you more a par with someone paying at a higher rate based on a more recent, lower value of a comparable home...

2. As foreclosing dries up...the glut of foreclosed homes also sell off at discounts to get blighted neighborhoods back on track. Now in the hands of people who actually saved enough for a traditional down payment are guaranteeing they'll not default...SO LONG as the market STABILIZES. Many of these people never could afford a home before due to the outrageous prices... or wouldn't dream of investing in rental properties when property values outpaced realistic rents.

3. Through a mass education drive, everyone comes to realize the current economic crisis took it's toll, but also has it's up side:
a. your home value is half or less than before (life can be a brutal affair...)
b. your retirement savings (stocks, and other investments...) also down by half... (life can definitely be cruel...)
c. BUT, you're not alone...everyone is in the same boat...many are in jeopardy of their job (if you haven't already), but with extra unemployment weeks and health benefits is an opportunity to get into something you may have thought could be better.
d. any loss of income is relative...so long as you're paying the same per month for your place as the guy next door, who cares if he got it for half...just think of the benefits of lower housing costs for our youth and underpaid !!!! If the mechanic or doctor (sure!) doesn't have the same expenses, he may just lower his rates too! Let's hope any stimulus doesn't extend the ever expanding medical expenses (based on free govt. money for the medical, pharmaceutical, and insurance industries...)

NEVER again will there be such irresponsible oversight of the banking / investment "industries"...and those who willfully contributed to the problems are to be sought after and required to pay retribution. Stealing someone's retirement is as bad as stealing anything worth over $500 (a felony). If the accused are willing to let go of the loot, then they don't go to jail...and by jail I mean the jails I visited as a young man growing up in Mexico. You DON'T want to be in a Mexican jail unless you're lucky enough to have a family member bring you edible food. Even so, in these prisons your family cannot keep the varmints, bug infestations, and who knows what else from making your life the miserable one that a jailbird's should be...a place you'll do anything to avoid.

Visit our prisons here in the USA. Cafeterias and the food better than what our school children have. Ads in the Calif. job listings recently featured a position for part-time Rabbi...at $50K / yr. Native Americans have demanded and gotten T-Pee's set up for their religious well-being. Computer and arts science labs at these prisons are better than some community colleges! Work-out rooms...manicured lawns...late model vehicles for the staff...no sense of energy conservation as climate controlled environments consume more energy than the average US citizen consumes!

But I got off track and wish to conclude...

The economy will fix itself as we regain confidence the worst is over. But worst is not over when we're borrowing funds that have to be paid back. It seems to many that paper money can grow on trees...that money is relative...and to an extent it is. If the cost of everything goes down by half, we only have to earn half to stay even. But to the extent our children are expected to carry the debt burden, it's foolish to spend money that's not going to help us recover. KEEN business minds should be helping make economic decisions now. New school buildings may not be as good as new curriculums in old buildings teaching vital skills translating into the jobs we need for the infrastructure rehabilitation, sustainable energy, et al. I'm also fully in favor of extending basic needs for survival: unemployment funds, food stamps, health care (so long as it's not designer, zillion dollar drugs being promoted by pharmaceutical industry...when a good walk could do the same or better...).

But really... Why not let the small businesses in each State have a shot at their share of this NEW DEAL MONEY? We're always mentioned as a major source of job creation.

Though my present company is focused on light electric vehicles (LEV's...including conversion kits for bicycles, motorcycles...small 2 and 3 seaters...), small scale wind generators, and solar-tracking skylights...with some financing we could expand into solar thermal collectors for air conditioning, air and water heating...little or no electricity required!

In a few minutes I "did the numbers" for a small fleet of luxury commuter buses for the San Francisco Bay Area...a model which could be used in any metropolitan area. The RV factories in Indiana are hungry now that gas prices have eaten into the demand for their luxury hotels on wheels. The same chassis and body merely needs to be outfitted with plush seats, WiFy...fully reclining seats, partitioned off for quiet, chat, or TV rooms. 30 to 40 passengers in an otherwise 60 passenger vehicle, riding in COMFORT, arriving quickly and leaving the driving to a driver / part-owner operator. Driver spends 5 to 6 hrs. driving...the rest maintaining the vehicle, doing "the books", and promoting the biz when necessary. My numbers show this to be a profitable business...as privately run buses in Mexico City, Shanghai, and other areas have proven to be.

We need to rebuild our existing crumbling roadways BEFORE adding new ones!...BEFORE considering billion dollar, long term rail systems where getting to and from these always seems to be the problem. Freeways fill up as soon as you build them...meanwhile orchards become shopping mall parking lots and behemoth tract houses become the (Ugh...) norm.

Shall we offer a few "expert" administrators more money they can even begin to imagine the most worthwhile use to be?

MICRO LOANS...on a small US business scale of say 100 to 500K. In some cases 5K or less might do it! These people put themselves and others to work. I know...I once was a Union guy with a foot problem requiring me to be creative. Luckily I had some unemployment help, training help, AND personal resources to get me going. Loans are vital...but only at affordable low interest rates...say 1%...1/2 percent over the Federal Reserve Rate...not the 6-7% and more quoted by banks these days.

Nuff said, other than thanks for reading if you got this far.

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Submitted by Dennis Lane (not verified) on February 2, 2009 - 11:41am.

This is the Looting of America get used to it, it's what happens in most third world nations. Look around and choose your own ground. This life experience has been brought to by those past and present crooks on Wall Street and in Government.

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Submitted by Dennis Lane (not verified) on February 2, 2009 - 11:49am.

you really need to read "The Long Emergency", ever heard of peak oil, well we are there. The rail systems are the thing at this time not new roads for car without fuel to travel on.
But most of what you had to say made a lot of sense. Thanks for the input.

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Submitted by radline9 (not verified) on February 2, 2009 - 12:15pm.

I knew they were just going to steal the money and give it to rich people. That's how it works for everything. We pay, pay, pay and they take, take, take.

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Submitted by sally mason (not verified) on February 2, 2009 - 12:55pm.

Sam, so nice to see possibilities when so much is blame and bitch. Thanks for good ideas and reasons for hope.

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Submitted by pat (not verified) on February 2, 2009 - 4:23pm.

What kind of journalism are you practicing. I can download the same PDF's and publically present the in quotes as you have. You're story didn't mean a thing to me. Are you just cranking it out, or are you practcing real journalism. I really don't know what you said.

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Submitted by john (not verified) on February 2, 2009 - 5:12pm.

"Penalties for default need also be strengthened to prevent foreclosure as an option." you are so very right on that statement Sam

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Submitted by Robert Moran (not verified) on February 2, 2009 - 6:20pm.

Learn what money is, then criticize what is going on here because if one does not know the fundamentals of any given discipline, then nothing of consequence can ever be accomplished. Everyone assumes to know what money is. This is false because if one takes the time to learn, the truth will amaze you. Start with the Fed and understand what that private entity, protected by government does.

After that, bitch and scream about this FUBAR plan because you will intuitively know why we are being systematically shafted by people who are supposed to work for the public good. To discuss this topic in any other fashion, IMHO, is equivalent to the sound and fury of a idiot signifying nothing.

End of rant.

The article, BTW, is a good one.