Do You Care Where Your $700 Billion Went?
We've all seen the headlines for the Troubled Asset Relief Program (TARP).
You know, the $700 Billion dollar influx of money the government threw at banks to prevent a meltdown and another great depression.
With such a vast amount of taxpayer money, you'd figure the government would have the sense to provide some kind of accountability to prevent waste.
WRONG.
None of these banks are required to disclose how they are spending this money.
And unsurprising, most of them aren't.
Worse, a recent Wall Street Journal article pointed out that $1.
6 Billion of TARP funds were paid out to high powered executives.
The same executives that purchased risky assets without raising questions.
The same executives that cooked the books to fool investors into thinking they weren't heavily leveraged towards sub-prime loans.
The other disturbing trend is among companies changing status to bank holding companies.
With that change of status, financially shaky companies are essentially "cut-in" to the TARP money available for struggling banks.
Goldman Sachs, a famous investment bank, was among the first to change their status to a bank holding company.
Suddenly, companies like American Express are pushing to gain bank holding status.
And while the argument can be made that Goldman should be saved, Jim Cramer brought up an point that underscores the problem.
A small market business and loans company called CIT Group (CIT) decided that it too wanted bank holding status.
And while their market is downsizing and the business is failing, TARP money would essentially allow this company to stay afloat and survive the downturn, regardless of how poor their company and management performed.
Essentially, America is becoming the Soviet Union, with state sponsored companies that can never fail.
I don't pretend to know what is required to stimulate the economy to prevent a serious recession, but I know that big government wastes big dollars.
There is no reason that the TARP plan should have passed through congress with the lack of oversight and structure it currently has.
The sub-prime mess had been brewing since the collapse of Bear Sterns in March and congress (plus the President) failed to act, perpetuating the problems that nearly caused an financial collapse.
You know, the $700 Billion dollar influx of money the government threw at banks to prevent a meltdown and another great depression.
With such a vast amount of taxpayer money, you'd figure the government would have the sense to provide some kind of accountability to prevent waste.
WRONG.
None of these banks are required to disclose how they are spending this money.
And unsurprising, most of them aren't.
Worse, a recent Wall Street Journal article pointed out that $1.
6 Billion of TARP funds were paid out to high powered executives.
The same executives that purchased risky assets without raising questions.
The same executives that cooked the books to fool investors into thinking they weren't heavily leveraged towards sub-prime loans.
The other disturbing trend is among companies changing status to bank holding companies.
With that change of status, financially shaky companies are essentially "cut-in" to the TARP money available for struggling banks.
Goldman Sachs, a famous investment bank, was among the first to change their status to a bank holding company.
Suddenly, companies like American Express are pushing to gain bank holding status.
And while the argument can be made that Goldman should be saved, Jim Cramer brought up an point that underscores the problem.
A small market business and loans company called CIT Group (CIT) decided that it too wanted bank holding status.
And while their market is downsizing and the business is failing, TARP money would essentially allow this company to stay afloat and survive the downturn, regardless of how poor their company and management performed.
Essentially, America is becoming the Soviet Union, with state sponsored companies that can never fail.
I don't pretend to know what is required to stimulate the economy to prevent a serious recession, but I know that big government wastes big dollars.
There is no reason that the TARP plan should have passed through congress with the lack of oversight and structure it currently has.
The sub-prime mess had been brewing since the collapse of Bear Sterns in March and congress (plus the President) failed to act, perpetuating the problems that nearly caused an financial collapse.
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