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Study: Bank Bailout Exposes Government to Massive Losses, Fraud
A report by the Treasury inspector general for Congress says the Obama administration's Troubled Asset Relief Program leans toward the private sector at a risk to taxpayers.
WASHINGTON -- Taxpayers are increasingly exposed to losses and the government is more vulnerable to fraud under Obama administration initiatives that have created a federal bank bailout program of "unprecedented scope," a government report finds.
In a 250-page quarterly report to Congress, the rescue program's special inspector general concludes that a private-public partnership designed to rid financial institutions of their "toxic assets" is tilted in favor of private investors and creates "potential unfairness to the taxpayer."
In particular, the report cited the private-public partnership that would purchase troubled real estate-related securities from financial institutions. Under plans unveiled by Treasury, for every $1 of private investment, Treasury would invest $1 and could provide another dollar in a nonrecourse loan. That money could then leverage a loan from another government fund backed mostly by the Federal Reserve, a step that Barofsky says would dilute the incentive for private fund managers to exercise due diligence.
Barofsky recommends that Treasury not allow the use of Fed loans "unless significant mitigating measures are included to address these dangers."
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bill black, liz warren and the fbi aren't alone against the banker oligarchs anymore. this guy's got chops.
A report by the Treasury inspector general for Congress says the Obama administration's Troubled Asset Relief Program leans toward the private sector at a risk to taxpayers.
WASHINGTON -- Taxpayers are increasingly exposed to losses and the government is more vulnerable to fraud under Obama administration initiatives that have created a federal bank bailout program of "unprecedented scope," a government report finds.
In a 250-page quarterly report to Congress, the rescue program's special inspector general concludes that a private-public partnership designed to rid financial institutions of their "toxic assets" is tilted in favor of private investors and creates "potential unfairness to the taxpayer."
In particular, the report cited the private-public partnership that would purchase troubled real estate-related securities from financial institutions. Under plans unveiled by Treasury, for every $1 of private investment, Treasury would invest $1 and could provide another dollar in a nonrecourse loan. That money could then leverage a loan from another government fund backed mostly by the Federal Reserve, a step that Barofsky says would dilute the incentive for private fund managers to exercise due diligence.
Barofsky recommends that Treasury not allow the use of Fed loans "unless significant mitigating measures are included to address these dangers."
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bill black, liz warren and the fbi aren't alone against the banker oligarchs anymore. this guy's got chops.
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