Sunday, September 06, 2009

Inspector General: Financial Bailouts May Cost Taxpayers $23.7 Trillion

In July, Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program (TARP), reported that American taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies.

Barofsky was appointed by President Bush last November to represent the taxpayers and oversee the mammoth bailout of the nation's financial system. His role is to scrutinize how the money is spent, and root out graft, corruption, and the potential mismanagement of an absolutely massive amount of taxpayer money.

Last fall, Congress hastily approved the $700 billion TARP in what was deemed an emergency situation. But many legislators, and the public at large, were astonished by the sheer size of the government intervention.

Yet it was a mere fraction of all the public money that has been, and continues to be, used to rescue US banks, investment houses, and other financial institutions including AIG, one of the world's largest insurance companies.

The Federal Reserve alone doled out $6.8 trillion in aid. And Barofsky estimates additional massive government infusions including the following: $2.3 trillion in programs offered by the Federal Deposit Insurance Corporation; $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.

Taken as a whole, these various undertakings amount to a staggering sum total of $23.7 trillion, which US taxpayers will be responsible for. To put it in perspective, that is more than seven times the current federal budget.

So far, the Treasury has spent $441 billion of TARP funds and has allocated $202.1 billion more for other spending, according to Barofsky. That amounts to just over $643 billion, almost all the money originally authorized by Congress and approved by President Bush last fall.

However, in the eleven months since Congress authorized TARP, Treasury has created 12 programs involving funds that may reach almost $3 trillion, according to Barofsky.

Keeping track of it, and being sure that it is all appropriately spent, is a Herculean task. And it's all the more difficult when the agencies it is monitoring refuse to be cooperative.

Barofsky offered criticism in a 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.

Friction between Barofsky and Treasury resulted in Congress complaining that the Obama Administration was trying to interfere with Barofsky's work. Treasury has fought Barofsky each step of the way, dragging its feet, or outright refusing, when his office requested documents.

In fact, Treasury went as far as asking the Justice Department if it actually had to fulfill Barofsky's requests, and if the inspector general's office was instead subject to the Treasury's authority.

Ultimately, last week the Treasury announced that it would not continue to challenge Barofsky and his watchdog agency.

But it shows that the Treasury is disinclined to transparency, scrutiny, and supervision. This begs an obvious question: what is it hiding?

Meanwhile, the Fed is fighting a proposed Congressional audit.

The central bank and the Treasury work in unison, like two perfectly aligned gears. Neither likes any authority— other than their own—and neither likes accountability. Having to answer the inquiries of the inspector general must feel like stooping to the dictatorial duo.

The disturbing reality is that a cavernous hole has been dug by elitist bankers and their enablers which the American people will never get out of. The taxpayers will be paying off these monumental debts in perpetuity.

A sum as large as $23.7 trillion is totally incomprehensible, and the grandest case of larceny in the history of the world has been perpetrated against the American people.

This heist, one of entirely historic proportions, amounts to nothing less than a coup de grace by the Fed and their banking brethren.

We are all now at their mercy.

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