TARP Inspector: Financial System May Now Be In A “Far More Dangerous Place” (VIDEO)
Moral hazard (tails you loose, heads I win) has increased and “is far more dangerous today than a year ago.” Neil Barofsky, TARP Inspector[youtube]http://www.youtube.com/watch?v=BvwKzF6TLKo[/youtube] FILE THIS one under “Financial Health” so it doesn’t seem to far off this site’s main focus, your personal health. I’m compelled to blog about this because it’s so important. After all, next to your personal health, financial health is uber important, as we’re a long way off from sustaining ourselves by hunting and gathering, and sheltering ourselves with animal skins stretched around tepee poles.
The issue at hand is what’s happening to our financial system in America? Whose side is the Treasury Department and President Obama on?
It would seem they’re on the banks side, cause:
1. Banks have been allowed to get bigger than before the crisis, thus insuring that they’re even more “to big to fail” now than before the financial crisis;
2. The big banks have been allowed to buy other big banks, thus reducing competition and the number of banks in the system;
3. Despite the trillions of tax payer funds (and money borrowed from the Chinese) invested, loaned and guaranteed to the banks, it has not improved liquidity (availability of credit);
4. The level of risky investments banks make — the very thing that sunk the economy — has not abated; and
5. The bonuses, whether measured by amount (still multiple millions for many), or how earned (creating short-term profits with potential long-term losses), have not been restructured.
Say what!? Yep, it’s true.
Neil Barofsky, the special inspector general who tracks the historic bailout known as the Troubled Asset Relief Program (“TARP”) is interviewed in the video above by the Huffington Post Investigative Fund. Mr. Barofsky makes it clear that he is intent on demanding transparency from all quarters — including the U.S. Treasury. His next audit is due in October.
In the video he makes these observations:
- He found hundreds of banks capable of tracking their use of the TARP money – despite claims by the U.S. Treasury that the task was impossible.
- If the purpose of the TARP rescue was to increase lending, it has failed.
- The U.S. financial system, now dependent on bigger and fewer banks, is shakier than ever.
I hope this riles you up a bit… quite a bit! Know that it’s very important to a lot of Americans, as evidenced by the TARP web site’s popularity — 26 million hits!
Do stay tuned to this issue.
(A note about a term: In the video, money is referred as being “fungible“, meaning that any unit of money is easily exchangeable with another unit of money. The Treasury’s claim that the TARP money is not able to be tracked comes from this concept, a claim that Mr. Barofsky has proven to be false.)