24
Trillion to Fix Financial System
In New
Report, Neil Barofsky Says It's Possible Government
Could Spend $23.7 Trillion to Fix Financial System
By MATTHEW JAFFE
July 20, 2009
"The total potential federal government support could reach up to
$23.7 trillion," says Neil Barofsky, the special inspector general for the
Troubled Asset Relief Program, in a new report obtained
Monday by ABC News on the government's efforts to fix the financial system.
Yes, $23.7 trillion.
"The potential financial commitment the American taxpayers could be
responsible for is of a size and scope that isn't even imaginable," said
Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and
Government Reform Committee. "If you spent a million dollars a day going
back to the birth of Christ, that wouldn't even come close to just $1 trillion
-- $23.7 trillion is a staggering figure."
Granted, Barofsky is not saying that the government will definitely
spend that much money. He is saying that potentially, it could.
At present, the government has about 50 different programs to fight the current
recession, including programs to bail out ailing banks and automakers, boost lending and
beat back the housing crisis.
Barofsky's estimate means
that if each federal agency spends the maximum potential amount involved in
these 50 different initiatives -- if the Federal Reserve ends up spending $6.8
trillion on its programs. If the Treasury Department spends $4.4 trillion, if the Federal
Deposit Insurance Corporation spends $2.3 trillion, and so on -- then the
numbers add up to a total of $23.7 trillion.
That figure, Barofsky notes, is designed to "suggest the scale and
scope of these efforts and not to provide a firm financial statement." It
is not a figure that has been evaluated to give an estimate of likely net costs
to the American taxpayer. "The actual potential for losses," he says,
"is likely to be lower."
But in his new quarterly report to Congress that will be released
Tuesday, the watchdog warns that hundreds of billions of taxpayer dollars could
be lost if the government does not make certain changes to these programs. The
Treasury Department, he cautions, needs to increase the transparency of the
$700 billion TARP program, which he says has grown to an unprecedented scope
and scale.
"Although Treasury has taken some steps toward improving
transparency in TARP programs, it has repeatedly failed to adopt
recommendations that SIGTARP believes are essential to providing basic
transparency and fulfill Treasury's stated commitment to implement TARP with
the highest degree of accountability and transparency possible," Barofsky
says in the report.
Barofsky said his office currently has 35 ongoing civil or criminal
investigations