Elizabeth Warren and the Congressional Oversight Panel have released their third monthly oversight report and it is pretty alarming because it goes into detail over how much the government, and thus the American taxpayers, have LOST due to the Troubled Assets Relief Program (TARP).
Official website of Congressional Oversight Panel (//http://cop.senate.gov)
COP Report 3: 2/6/2009 (PDF format) (//http://cop.senate.gov/documents/cop-020609-report.pdf)
I am including some of the more significant sections below:
In October 2008, Treasury abandoned its original strategy of purchasing "troubled" mortgage and other assets from the nation's financial institutions, deciding instead to invest money directly into those institutions. The Panel made clear in its first report to Congress and the public, on December 10, 2008, that it wanted to know if "the public is receiving a fair deal" under the TARP in general and for those investments in particular.
The Panel's review of the ten largest TARP investments the Treasury made during 2008 raises substantial doubts about whether the government received assets comparable to its expenditures.
Valuation of the transactions is critical because then-Treasury Secretary Henry Paulson assured the public that the investments of TARP money were sound, given in return for full value: "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything." In December, he reiterated the point, "When measured on an accrual basis, the value of the preferred stock is at or near par." This means, in effect, that for every $100 Treasury invested in these companies, it received stock and warrants valued at about $100.
An extensive valuation analysis of the ten transactions that was commissioned by the Panel concluded that:
- In the eight transactions which were made under the investment program for healthy
banks, for each $100 spent, Treasury received assets worth approximately $78.
- In the two transactions which were made under programs for riskier banks, for each
$100 spent, the Treasury received assets worth approximately $41.
- Overall, in the ten transactions, for each $100 spent, the Treasury received assets
worth approximately $66.
Extrapolating these results using appropriate weighting to all capital purchases made in 2008 under TARP, Treasury paid $254 billion, for which it received assets worth approximately $176 billion, a shortfall of $78 billion.
(END SEGMENT)
So in effect, AT THE TIME OF PURCHASE, American taxpayers had paid a premium of close to 45% for assets that Paulson claimed would be inherited at par 1-to-1 value. To quote the words of many a politician and economist... "And you ain't seen nuthin yet!"
Our economy has been gutted and now "we the people" are hemorrhaging money that's being infused into the bloated corpse so the greedy can continue to feed.
lw