“We feel a great obligation as responsible stewards of their money,” Assistant Treasury Secretary Herbert Allison Jr. says, adding that the Treasury is committing every effort to ensuring an ample return for taxpayers for their lending to TARP. (0:18)
The Troubled Asset Relief Program (TARP) has been “key to stabilizing the financial system and preventing greater deterioration in the availability of credit,” says Assistant Treasury Secretary for Financial Stability Herbert Allison, Jr. Despite signs of economic recovery, “our financial system and our economy remain vulnerable…this is why Treasury must remain vigilant and press ahead in our economic stabilization efforts,” he adds. (0:57)
By Mariko Lamb, Talk Radio News Service
Assistant Treasury Secretary for Financial Stability Herbert Allison, Jr. said that the Troubled Asset Relief Program (TARP) has been “key to stabilizing the financial system and preventing greater deterioration in the availability of credit,” in his testimony to the House Oversight and Investigations Subcommittee Wednesday.
“There’s also signs that the economy is beginning to mend,” he said. Indications of economic stabilization include an increase in the issuance of corporate debt, increase in consumer confidence, and higher housing starts.
Despite these improvements, “Our financial system and our economy remain vulnerable,” he said, as unemployment and home foreclosures remain high and strains in the commercial real estate market continue to build. “This is why Treasury must remain vigilant and press ahead with our financial stabilization efforts,” he said.
Allison attempted to assure members of the subcommittee that taxpayers can put their trust in the Treasury, and that the agency is dedicated to high standards of transparency.
“We feel a great obligation as responsible stewards of their money,” he said, assuring those at the hearing that the Treasury is committing every effort to ensuring an ample return for taxpayers.
“I will regularly update Congress on our progress. We have productive, working relationships with our four oversight bodies–Special Inspector General of the TARP, Government Accountability Office, Congressional Oversight Panel, and Financial Stability Oversight Board,” he said.
Information on lending activities of Treasury-invested banks can be found at www.financialstability.gov.
Rep. Dennis Kucinich (D-Ohio) claims that the Federal Reserve has paid banks so that they will keep excess funds from being used as loans for small businesses. (1:00)
Annie Berman – Talk Radio News Service
Taxpayers are not being told what is happening with the money they have involuntarily invested in the Troubled Asset Relief Program (TARP). Treasury Special Inspector General Neil Barofsky testified to the Oversight and Government Reform Committee that the most important recommendation that he could give to the committee would be a push for more transparency.
Tuesday’s hearing was a part of a series of hearings in which the TARP program is assessed and new developments of the program are reported to the committee.
Barofsky made sure that he was able to answer all questions honestly and thoroughly, as he recognized the concern that the committee has over transparency.
“The full transparency that we [the committee] asked for, which this President and this administration has promised is being blocked by the bureaucracy that often seems to say ‘just trust us and we will deliver,’” said Ranking Member Rep. Darrell Issa (R-Calif.).
Issa also brought up the staggering $23.7 trillion figure that has everyone on the Hill buzzing, and possibly a little scared. Issa asked Barofsky if he ever said in his reports that the U.S. would lose such an enormous amount of money in assurances and insurances.
“Of course not, and we explicitly point out in the report the existence of collateral…If every program is maximized to the greatest extent possible, that’s what that number is.”
In the last 3 months of the TARP, there have been an expansion of programs including expansion of the mortgage modification program to which approximately $18 billion has been allocated. There have also been more than $70 billion in TARP paybacks, and the Public Private Investment Program (PPIP) was launched with an allocation of approximately $30 billion in taxpayer money.
“Unfortunately, in rejecting SIGTARP’s basic transparency recommendations, TARP has become a program in which taxpayers are not being told what most of the TARP recipients are doing with their money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested,” said Barofsky in his opening statements.
Barofsky’s position was created to specifically oversee what happens to TARP funds. He and his office carry out audits on institutions that have received TARP funds, and carry out investigations of issues concerning securities fraud, suspected accounting fraud, insider trading, mortgage service misconduct, mortgage fraud, public corruption, false statements and tax investigations. These investigations were developed through tips or leads provided anonymously to the SIGTARP Hotline (877-SIG-2009) and online at www.SIGTARP.gov.
At a hearing on the Bank Of America-Merrill Lynch merger Thursday, Congressman Dennis Kucinich (D-Ohio) explains how Hank Paulson and Ben Bernanke were able to bailout BOA without firing it’s executive board. Kucinich notes that in other similar situations, such as with the Royal Bank of Scotland, top management was dismissed as part of the terms with which to bail out the bank. Not only did Bank of America’s board keep their jobs, explained Kucinch, but the company also received money from the Troubled Asset Relief Program. (0:54)
Rep. Barney Frank (D-Mass.) admits the government initially did too much to put lower income people into housing, but says the proposed “TARP for Main Street” program will help communities purchase foreclosed homes (0:43).
By Joseph Russell- Talk Radio News Service
Rep. Barney Frank (D-Mass.) introduced the “TARP for Main Street Act of 2009” during a House Financial Services Committee meeting Thursday. The legislation is designed to use money made available under the Troubled Assets Relief Program, to help struggling homeowners and neighborhoods as the economy worsens.
Frank said “the program is one where money is provided to communities to buy-up property that was foreclosed.”
However, committee Republicans said that the program will continue to add to the massive national deficit. They also criticized the plan because it circumvents the appropriation process by taking $6.2 billion directly from the general fund, a procedure they say violates the Constitution.
“There seems to be a competition by Democrats, especially in this committee, who can come up with the most outlandish way to spend tax payer’s dollars,” Rep. Scott Garrett (R-N.J.) said. “The current proposal is to take the TARP program and turn it into something of a Madoff like Ponzi scheme.”
Frank plans to fund “TARP for Main Street” with money that was originally appropriated for bank bailouts. Some $68 billion has been given back by banks who did not need the money. Frank believes the money should be “recycled” and given to struggling homeowners.
TARP originally appropriated $700 billion in emergency bailouts as a measure to stabilize the financial markets.
By Annie Berman — Talk Radio News Service
Bank of America CEO Ken Lewis apparently did not disclose information about Merrill Lynch’s huge losses to his shareholders before the announcement of the company’s merger earlier this year.
“We hope to better understand what happened in the four months between September 15, 2008, when the merger was announced, and January 16, 2009, when the public learned that Bank of America had received $20 billion in taxpayer money,” said Rep. Edolphus Towns (D-N.Y.), during a hearing with the Committee on Oversight and Government Reform.
Previously, Lewis had claimed that the government told him that he would be terminated, along with his board, if he did not keep quiet about the deep financial difficulties at Merrill Lynch.
“Just nine days after the shareholders voted, he discovered a $12 billion loss at Merrill Lynch. Mr. Lewis then told Treasury Secretary Hank Paulson that he was strongly considering backing out of the deal. According to Mr. Lewis, Paulson ultimately told him that if he didn’t go through with the acquisition, then the board would be fired,” said Towns in his opening statements, citing a disposition taken by New York Attorney General Andrew Cuomo.
Bank of America disclosed Merrill Lynch’s 2008 fourth quarter loss of $13.1 billion more than a month after Bank of America shareholders voted to approve the merger on December 5, 2008.
On September 15, 2008, it was announced that the merger between Bank of America and Merrill Lynch would proceed. On January 16, 2009, it was announced that Bank of America had received $20 billion in Troubled Assets Relief Program (TARP) money.
Lewis apparently wanted to use a Material Adverse Change Clause (MAC) to terminate the merger of the two companies.
A MAC clause gives the buyer the power to terminate a contract if the buyer feels that the assets it is acquiring are in trouble or are detrimental to the buyer.
Lewis claims to have been surprised by the huge losses suffered by Merrill Lynch.
Rep. Gerry Connolly (D-Va.) asked Lewis when he decided to disclose the losses. Lewis responded by saying “I don’t decide on disclosures. We have securities lawyers and many times they talk to external counsels to determine that…we disclosed the losses at Merrill Lynch consistent with the agreement and consistent with announcing our earnings on January 16, 2009.”
Towards the close of the hearing, Rep. Dennis Kucinich (D-Ohio) challenged Lewis, telling the CEO that he had to have known about the Merrill Lynch losses before the merger, and that using a MAC clause was not credible.
Bureau Chief Ellen Ratner and White House Correspondent Victoria Jones will be attending a White House briefing with White House Press Secretary Robert Gibbs
The Washington Bureau will also be covering:
-Constitution Subcommittee hearing on “The Legal, Moral, and National Security Consequences of ‘Prolonged Detention”
-Treasury Secretary Timothy Geithner testifies to the Senate Appropriations Committee Financial Services and General Government Subcommittee hearing on proposed budget estimates for FY2010 for the Treasury Department and the Internal Revenue Service
-Joint Economic Committee hearing on “TARP (Troubled Asset Relief Program) Accountability and Oversight: Measuring the Strength of Financial Institutions
-Defense Secretary Robert Gates’ testifies to the Senate Appropriations Committee Defense Subcommittee hearing on the proposed budget estimates for FY2010 for the Defense Department
-HHS Secretary Kathleen Sebelius testifies to the Senate Appropriations Committee Labor, HHS, Education, and Related Agencies Subcommittee hearing on the proposed budget estimates for FY2010 for the Health and Human Services Department
-House Majority Leader Steny Hoyer (D-Md.) weekly pen and pad news briefing
-The Center for American Progress (CAP) discussion on “Stopping Pakistan’s Militants: How to Support Pakistan’s Civilian Government”
-Discussion on “The Future of Employer-Provided health care” at the Heritage Foundation
