US
Rescue May Reach 23.7 Trillion, Barofsky Says
By
Dawn Kopecki and Catherine Dodge
July 20 (Bloomberg) --
The Treasury’s $700 billion bank-investment program represents a
fraction of all federal support to resuscitate the
“TARP has evolved into a program of unprecedented scope, scale and
complexity,” Barofsky said in testimony prepared for a hearing tomorrow before
the House Committee on Oversight and Government
Reform.
Treasury spokesman Andrew Williams said
the
“These estimates of potential exposures do not provide a useful
framework for evaluating the potential cost of these programs,” Williams said.
“This estimate includes programs at their hypothetical maximum size, and it was
never likely that the programs would be maxed out at the same time.”
Barofsky’s estimates include $2.3 trillion in programs offered by
the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from
the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac,
credit unions, Veterans Affairs and other federal programs.
Treasury’s Comment
Williams said the programs include escalating fee structures
designed to make them “increasingly unattractive as financial markets
normalize.” Dependence on these federal programs has begun to decline, as shown
by $70 billion in TARP capital investments that has already been repaid,
Williams said.
Barofsky offered criticism in a separate quarterly report of
Treasury’s implementation of TARP, saying the department has “repeatedly failed
to adopt recommendations” needed to provide transparency and fulfill the
administration’s goal to implement TARP “with the highest degree of
accountability.”
As a result, taxpayers don’t know how TARP recipients are using
the money or the value of the investments, he said in the report.
‘Falling Short’
“This administration promised an ‘unprecedented level’ of
accountability and oversight, but as this report reveals, they are falling far
short of that promise,” Representative Darrell Issa of
The Treasury has spent $441 billion of TARP funds so far and has
allocated $202.1 billion more for other spending, according to Barofsky. In the
nine months since Congress authorized TARP, Treasury has created 12 programs
involving funds that may reach almost $3 trillion, he said.
Treasury Secretary Timothy Geithner
should press banks for more information on how they use the more than $200
billion the government has pumped into
The inspector general surveyed 360 banks that have received TARP
capital, including Bank of America Corp.,
JPMorgan Chase & Co.
and Wells Fargo & Co. The responses, which the inspector general said it
didn’t verify independently, showed that 83 percent of banks used TARP money
for lending, while 43 percent used funds to add to their capital cushion and 31
percent made new investments.
Barofsky said the TARP inspector general’s office has 35 ongoing
criminal and civil investigations that include suspected accounting, securities
and mortgage fraud; insider trading; and tax investigations related to the
abuse of TARP programs.