Published March 17, 2011
There must be something in the water down in D.C., because this administration continues to rely on fuzzy math when defending their continuing use of taxpayer dollars.
Today's example: TARP. The Treasury Department telling The Wall Street Journal those banks have repaid 99 % of the bailout, or $244 billion of the $245 billion disbursed to the banks.
They go on to say TARP will ultimately provide taxpayers with a $20 billion profit. That sounds amazing, but once again, not quite true.
As members of the Congressional Oversight Panel will tell you, TARP is far from dead, and the profits aren't rolling in.
In an op-ed in the Journal, the panel members point out 550 banks, as well as AIG, GM and Chrysler, are nowhere near ready to pay back the federal government. That means we're still about $160 billion from breaking even, including about $100 billion from AIG alone.
The final report by the watchdog panel concluded we would likely never recoup all of the $85 billion extended to the auto industry. And it's not just those paid directly with TARP money costing us taxpayers.
Two of the biggest culprits of this financial crisis: Fannie Mae and Freddie Mac. Instead of paying back taxpayer money - they just keep asking for more.
In fact, the Congressional Budget Office is predicting over the next decade the price tag for the two government-run mortgage giants will be about $380 billion.
The Journal points out other fed and FDIC programs used another $3 trillion on helping out the risky banks and buying mortgage-backed securities. So when it comes down to it, TARP is only a fraction of the bailout costs, but it's impact will be felt for a very long time.
For one, it has reinforced "too big to fail" as a stark reality. The watchdog panel report states, "Very large financial institutions may now rationally decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss."
This means that the small-enough-to-fail banks don't have the same protections, limiting competition and in the end raising prices for consumers.
The panel also attacked TARP for its lack of transparency and not being able to determine which payments were succeeding because it never collected relevant data in the first place.
These are just some of the findings of the TARP panel, including calling the White House's foreclosure prevention program a failure.
When will people in D.C. stop with the fake numbers, face reality and come up with a real plan to make sure history doesn't repeat itself?