By Pete the Banker
The Obama Administration plans to divert $30 Billion in TARP funds repaid by large banks to aid small businesses. While the details of the program have not been fully disclosed yet the Treasury Department plans to distribute these funds through the banking system. Expect plenty of trouble.
The participating Banks would receive TARP funds at favorable rates from the Government and would re-lend those funds to small business. The Administration is specifically fashioning this new TARP program so that the participating banks would apparently have few restrictions, would not have limits on executive’s compensation and will not be subject to independent oversight. What could possibly go wrong??
The Obama Administration plans to divert $30 Billion in TARP funds repaid by large banks to aid small businesses. While the details of the program have not been fully disclosed yet the Treasury Department plans to distribute these funds through the banking system. Expect plenty of trouble.
The participating Banks would receive TARP funds at favorable rates from the Government and would re-lend those funds to small business. The Administration is specifically fashioning this new TARP program so that the participating banks would apparently have few restrictions, would not have limits on executive’s compensation and will not be subject to independent oversight. What could possibly go wrong??
Neil Barofsky was appointed the special Government Inspector General to oversee the use of TARP funds by Congress in Fall 2008.
Last November Barofsky took Timothy Geithner, the New York Federal Reserve Bank, and the Treasury Department to task in a scathing report over their use of TARP funds in handling of the AIG Bailout and the full reimbursement of Goldman and JP Morgan for their Credit Default Swaps.
He has been informed by the Treasury Department that he is likely to be excluded from the oversight of the $30 Billion in TARP funds being diverted by the Obama Administration under the recently announced Small Business Loan Program.
Barofsky when informed issued a letter that stated, that Treasury was “acting contrary to the best interests of the taxpayer” and went on to state in a subsequent letter to Treasury that the new program would be “vulnerable to fraud” without independent oversight. Don’t Secretary Geithner and the Department of Treasury share his concern? Will those in Congress provide the only oversight? Perhaps they feel comfortable in doing so given their “expansive” experience in supervising Fannie Mae and Freddie Mac!