TARP allows the United States Department of the Treasury to purchase or insure up to $700 billion of “troubled” assets. “Troubled assets” are defined as “(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.”
On the one hand, the government needs to do something (that something is NOT give consumers large amounts of money – HYPERINFLATION PEOPLE!) but like most programs ran by the government it is ripe with questionable accounting, favors being traded and other shady stuff. On the other hand, these people messed up, plain and simple, why are my tax dollars being used to bail them out?
In the end I think TARP will prove effective but at what cost? The government owning most of the banks in the country is a VERY scary thing…think communism people – that kind of scary. By the way this is not the first time the gov’t got this involved in private industry to bail them out. Specifically, in the late 70’s the gov’t bailed out chrysler, and made money on the deal – $350mil to be exact!
- Citigroup is taking/took $50bil
- Those dirtbags at Bank of America are taking $25bil
- GM is taking/or took $13.4Bil – presumably
- Both Morgan Stanley and Goldman Sachs took/taking $10bil a piece
If you do your banking at a small or local bank I would check out if they are on it – if for no other reason to satisfy curiousity.
My real problem with the situation is that credit is not unfreezing! So lets slow down before just giving out the other $350bil and really think how to unfreeze the credit, if that is the point of TARP.