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  • Where the Returned TARP Money Goes

    There has been much discussion of the bank bailout funds this week--and some of it is good news for those who want financial insitutions to start giving back. Goldman Sachs and JP Morgan want to repay their TARP money. And earlier this week Treasury Secretary Geithner says he expects $25 billion of the TARP funds to be repaid by the end of the year. So where does that money go? According to The Explainer -- Slate 's Christopher Beam --the money goes back into the program: If a bank wants to return its TARP money, it gets siphoned back—by wire, usually—into the original pool. In his testimony, Geithner said there's $110 billion left of the original $700 billion allocated by the TARP program. So once the expected $25 billion is returned, the remaining stash should reach $135 billion. The return of the money seems like a good thing all around. But The Explainer points out there is a downside: Of course, there are risks to letting the banks return money. One is that they'll need it again, which would create a public relations snafu. Then there's a systemic risk problem: If one bank appears stronger than others, the weaker ones might get hurt as investors yank their money, and short sellers bet against them. That's why Geithner is insisting on completing the stress test—which measures the banks' strength—before deciding which big companies get to return their money. Read The Explainer's full explanation here . And track the returned money at Slate's Tarp-O-Meter here .

  • Special Inspector General for TARP Calls for More Transparency, Opens Investigations

    SIGTARP Neil Barofsky Treasury Secretary Timothy Geithner will appear before the Congressional Oversight Panel --the five member group set up by Congress to evaluate the Treasury's implementation of TARP funds--later today. Geithner will not only be answering questions raised in COP's latest report , but will also have to address the findings of one Neil Barofsky . Barofsky is better known as SIGTARP: the special inspector general for the Troubled Asset Relief Program. This morning Barofsky released a 250-page report full of concerns over the federal government's bailout actions to date. In the report, he calls for more transparency fromt he government on where the money is going, and pushes for recipients to report clearly how they are using the funds: SIGTARP continues to recommend that Treasury require all TARP recipients to report on the actual use of TARP funds in the manner previously suggested. This recommendation is particularly important with respect to the potential expansion of the Capital Purchase Program (“CPP”) to include large insurance companies. The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution’s core business and may be little more than a way to gain access to the low-cost capital provided under TARP. Similarly, in light of the controversy surrounding AIG’s use of Government assistance, both through the paying of bonuses and in its dealings with counterparties, failure to impose this requirement with respect to the injection of yet another $30 billion into AIG would not only be a failure of oversight, but could call into further question the credibility of the Government’s efforts with respect to the assistance provided to AIG. This recommendation applies not only to capital investment and lending programs involving banks and other financial institutions, but also to programs in which TARP funds are used to purchase troubled assets, including details of each transaction in the Public-Private Investment Program (“PPIP”) as well as all transactions concerning the surrender of collateral (including the identity of the surrendering borrowers) in the Term Asset-Backed Securities Loan Facility (“TALF”). Barofsky also reports that he has opened 20 criminal investigations and six audits into the potentially wasteful spending (misdirected funds) of TARP dollars. The New York Times provides the full report here .

  • Geithner Unveils New Program to Replace TARP

    Treasury Secretary Timothy Geithner unveiled the new Financial Stability Plan this morning. This replaces the Troubled Assets Relief Program, and at first glance it has a big price tag. The Washington Post reports the "multi-faceted plan could commit $1.5 trillion or more in public and private funds to rescue banks and financial institutions and thaw frozen credit markets." Lynn Sweet of the Chicago Sun-Times provides a full transcript here . Here is an excerpt of the speech. You can get a full transcript or watch the full speech at t new website the Treasury Department has set up to ensure "accountability and transparency." The site is financialstability.gov . Apart from the speech, the best resource at the site right now is this fact sheet .