Money flowing back goes to slush fund

On June 9 President Obama called a press conference where he announced, "Several financial institutions are set to pay back $68 billion to taxpayers."

He said, "It's worth noting that in the first round of repayments from these companies the government has actually turned a profit." The moment was hailed as a policy triumph for the Obama administration, and a sure sign the economy was on the road to recovery.

While Mr. Obama's announcement came as welcomed news, few questioned what would become of the returning funds, as it was rightly assumed that any money or profit would be returned to the general funds from whence it had come in order to pay down the debt. The truth, however, is that the money returned by the banks is finding new life as part of what amounts to a Treasury Department-controlled slush fund.

Former Treasury Secretary Henry M. Paulson Jr. had said of the Troubled Asset Relief Program that the Treasury Department "has no plans to recycle funds from the $700 billion Wall Street rescue package to make more capital injections into financial institutions." Mr. Paulson's position, however, runs in direct contradiction to that of current Treasury Secretary Timothy F. Geithner, who has announced the department will use returned funds to provide aid and loans to small banks. In the end, it seems Mr. Geithner's vision for the returning funds will win out over Mr. Paulson's, and the money will be used to supply smaller banks with cheap loans.

On June 9 President Obama called a press conference where he announced, "Several financial institutions are set to pay back $68 billion to taxpayers." While Mr. Obama's announcement came as welcomed news, it was rightly assumed that any money or profit would be returned to the general funds from whence it had come in order to pay down the debt. The truth, however, is that the money returned by the banks is finding new life as part of what amounts to a Treasury Department-controlled slush fund.

REFERENCE Sen. Corker: TARP Just a Big Slush Fund
Wednesday, May 6, 2009 1:06 PM, By: Marc Davis
http://moneynews.newsmax.com/streettalk/corker_tarp_slush_fund/2009/05/06/211386.html

TARP, the U.S. government's $700 billion Troubled Asset Relief Program, has become a slush fund, said Sen. Bob Corker, (R-Tenn.). Corker, a member of the Senate Banking, Housing and Urban Affairs Committee, told the annual meeting of the Tennessee Mortgage Bankers Association in Chattanooga that the executive branch can spend TARP money any way it wants. "It (disbursement of funds and transparency requirements) has not been carried out the way it should have," Corker said in his address to the mortgage bankers, quoted in the Chattanooga Times Free Press.

Despite his criticism of how TARP money is currently being handled, Corker said passage of legislation authorizing the bailout fund probably averted collapse of the financial system.

TARP legislation, requested by former President George W. Bush, was approved by Congress late in 2008. Last month, Corker and Sen. Mark Pryor (D-Ark.) introduced legislation that would impose strict mandatory reporting requirements for banks who receive TARP funds. Their proposed bill, the TARP Accountability Act, is designed to plug gaps in the oversight rules which track the billions of bucks the government is passing out and how that money is spent. Such stepped up oversight is a necessity, according to a report from the Government Accountability Office, released in January.

On this issue, even billionaire hedge fund manager and philanthropist George Soros would agree with Corker. The TARP program has been carried out in a "haphazard and capricious way" and "without proper planning," Soros said earlier this year. © 2009 Newsmax. All rights reserved.

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