It looks like the Obama administration is actually releasing documentation on where $293 billion of the Troubled Asset Relief Program (TARP) money is going.
What is happening to the rest of the money?
When the TARP bill was passed one of the stipulations was that it would be spent in 2 chunks, the first $350 billion was available immediately. On January 12, 2009 Barack Obama requested that George Bush release the additional $350 billion of the TARP. This document outlines the money that has been used up until January 23, 2009 and it totals $293 billion. Are we missing $57 billion?
Why was second half of the money released prior to using the first? I understood that the first half would be spent with full transparency and contingent on the use of the first half, we would then release the second half. But they released it anyway. So why release it in two chunks? I guess to make someone feel better about something.
As I review the document TARP is a bit of a misnomer as it appears that NONE of the money was used to purchase troubled assets. More like TBIP (Troubled Business Investment Program). To be fair I have not read the entire document. Once I do I will post an update.
What they do not discuss is where EXACTLY this money is coming from. In this time period the Fed’s balance sheet has increased by $1.2 Trillion. So I am wondering if the Fed is buying US treasuries to pay for TARP. This is how it is done in Zimbabwe, they basically buy their own debt and the currency literally loses half of its value every single day.
Here is the main summary. Click for the entire document.
(Update, Jim): Erik makes a good point in pointing out that the money may not be going for what it was originally intended. What is being spent may be being spent recklessly as well. As it turns out … $78 billion is … ummm … missing. overpaid? I had originally reported the $78 billion as missing. But the Treasury apparently overpaid for some of the Tarp assets … to the tune of $78 billion dollars. I am not sure which is worse.
When the Republicans at the heaing asked her how this could be, she saidd she did not know, she just knew the numbers.
Warren said Treasury failed to “price for risk,” and used a metaphor to explain: It’s as if Treasury was looking at 10 paintings and promised to pay $1 million for each, even though “one is a Picasso, one is a Rembrandt” and the other eight are not.
“There may be good policy reasons for overpaying,” Warren said, “but without clearly delineated reasons, we can’t know that.”