Tech Ticker's Take On TAR

Congress Fighting Over $200 Billion TARP Windfall

Posted Dec 07, 2009 12:30pm EST by Henry Blodget in Investing, Recession, Banking

If an investment firm tried to spin numbers this way, its principals would immediately be rounded up by the SEC.

It turns out that the TARP program--the emergency "investment" program designed to save our financial system--will lose $200 billion less than expected, according to new Treasury estimates.

The program will still lose a boatload of money, of course--$141 billion--but this loss is smaller than the White House's old loss estimate of $341 billion.  So this news already has Congress fighting over what to do with the windfall.

Before you pick a side in that fight, however, don't lose sight of what's really going on here.

The TARP was sold as an investment, one that would produce a major return for taxpayers once a "temporary liquidity issue" in the financial sector abated (Remember that one?  It's even more comical now).  Now, Congress is celebrating the fact that the loss on the TARP investment will be less than it thought--and fighting over what to do with the amount that won't be incinerated.

In any normal investment program, this return on our investment would go right back to the taxpayer--it's ours, after all.  In government, however, it goes right back to the White House and Congress, who will get to determine what is done with it.

So now you can pick a side: The Republicans want to use the leftover TARP to reduce the deficit.  The Democrats want to use it to fund a jobs program.

Posted via web from hotpixel

Popular Posts