For those with short memories, TARP was the Troubled Asset Relief Program of 2008, signed into law by President Bush in late 2008. It spent about $700 million in taxpayer funds in an effort to help banks weather the financial crisis of 2007/08.
It seems that much was hidden from taxpayers about the true wastefulness and downright fraudulent nature of this program. Neil Barofsky was the Inspector General of TARP. Bill Bonner reports that Mr. Barofsky said this to him:
"What did [the banks] do with the money? They were supposed to increase lending to help bring about a recovery. None of them did that. Instead, they used it to repay each other's loans. In other words, they used it to reduce the amount of credit available... not increase it. And they bought US agency bonds... just as you'd expect. And they paid out their bonuses.
"In other words, they looked out for themselves... just as you'd expect. I didn't know this information was going to bring down the banking system...
"The whole thing was so perverse, I can barely believe it. In a normal financial system, if a bank made a bad bet, it would pay a penalty. Counterparties might lend more money to it, but they'd want higher rates of interest to protect themselves.
"But here, in the bubble years, all the big banks made some of the worst bets in history... and what happened? The government stepped in... and lent them money... at lower rates of interest. They were rewarded for their mistakes. The good banks – that didn't have the backing of the government – actually paid higher rates of interest to borrow money than the bad banks.
"Another thing I wanted to know was exactly how much money was really at risk. We gave away $700 billion. But we also guaranteed loans... and gave lines of credit... and stood behind various financial transactions. I asked how much was at stake... how much was at risk. No one seemed to know. So we added it up. We found a total of $23 trillion. That's ‘trillion' with a capital ‘T.'
. . .
"The more questions I asked, the more I found myself isolated... and at odds with the Treasury Department, as well as the banks. I was having shouting matches in the Treasury. The banks hated me. And then the undersecretary of the Treasury called me into his office.
"He explained that if I eased up on the banks, I could have a very nice career after the TARP appointment expired. If I didn't play ball with them, I would find it hard to find a job.
"That's how it works. You go along and you get along. If you don't go along with the scams and the technical mumbo jumbo... you're out."
There's more at the link. Highly recommended (albeit infuriating) reading.
And this is the Washington bureaucracy we're trusting to fix our current economic woes . . . after having seen the monumental foul-up they produced with TARP and subsequent programs. Tell me again how successful this is going to be, if only we trust Big Government to do its job and leave them to get on with it while we pay our taxes like good little boys and girls?