TARP -- Connecting Dots
By Richard Olivastro
January 12, 2009

Almost half of the money is gone, that is, distributed; and, the other half is at risk.

Which begs the obvious questions -- gone where; and why is the rest at risk?

The short answers are:

About $300 Billion Dollars has been delivered to banks and other financial institutions, which as businesses, were - and remain - mismanaged and ill-advised.

And, the rest of the original $700 Billion dollar funded 'Troubled Assets Relief Program' - (TARP) is being targeted by the same politicians and bureaucrats -- including transitioning players - hankering to continue the 'feed-for-all' at the federal trough.

Here's some background on each:

The whistle was blown early-on by U. S. Rep. Virginia Brown-Waite, who declared - "We have been sold a pig-in-a-poke and a bait-and-switch has occurred".

Rep. Brown-Waite, a four-term Republican from Florida's 5th Congressional District, serves on the bipartisan congressional committee established to monitor the legislation. Her blunt assessment is 'spot-on' about the TARP funding process, and how the program has been administered, since the Emergency Economic Stabilization Act of 2008 was rushed through Congress and signed into law just three months ago.

As Treasury Secretary Henry Paulson originally stated, "We asked for $700 billion to purchase troubled assets from financial institutions in order to strengthen the financial sector". TARP was supposed to address the subprime mortgage crisis and reverse the decline in residential home values. But, almost immediately following enactment, Paulson switched the capital purchase program's focus and decided, instead, to bailout and 'invest' in banks and other financial institutions including: Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Bank of America (including Merrill Lynch), Citigroup, Wells Fargo, Bank of New York Mellon, State Street, AIG, et al.

In fact, as of last weekend, there are 296 financial entities that have - or will - receive some of the $300 Billion in the form of 'investments' from the Feds. The largest aggregate TARP payout so far is $45 Billion dollars to Citigroup.

As a result of the Treasury Secretary's switch, the sharp decline in both home values and home sales continues unabated. Meanwhile, the government equity infusion via TARP -- intended to stimulate credit lending -- instead, sits idle as bank officials prefer to spruce up the appearance of their balance sheets instead of lending to consumers and businesses.

This recalcitrance by lenders has birthed a political opportunity for Democrats to reopen TARP negotiations - this time essentially with themselves -- as the moving vans are just days from 1600 Pennsylvania Avenue. And that is exactly what Democrats are doing as a sort of practice exercise in redistributing financial assets. Rep. Barney Frank is the front man in the House. He is aggressively pursuing mortgage workouts as part of the TARP. In the Senate, Charles Schumer is playing a key role as last week Citibank "agreed to back legislation allowing judges to modify mortgage terms in bankruptcy".

All of this will serve incoming bureaucrats as training for the massive Trillion Dollar Stimulus Package that will be distributed as part of the reparation plan for political support and implementing 'The Obama Society'.

Of course, such an undertaking will need a highly specialized insider with experience and acceptance in financial circles and government.

Is it a coincidence that former Treasury secretary Robert Rubin, who already serves as an economic advisor on the Obama transition team, has become available - following his resignation last weekend as senior counselor from the bank that's "too big to let fail".

In a Citibank statement, Rubin, 70, said he "intends to deepen his involvement in outside activities and organizations to which he has been strongly committed". That could be Rubin's way of signaling he is available to advise Barack Obama full time.

If the President-elect calls Rubin, he would be - in effect - 'bailing out Bob' yet again.

The facts are that Rubin "advised Citigroup as it lost $20 billion in the subprime mortgage crisis"; and, in addition to the $45 billion aggregate TARP money given to Citibank so far, the government has also "committed $306 billion in guarantees to cover Citibank's risky loans and (other) toxic assets" accumulated during his tenure.

Let's hope that Mr. Obama takes the girls out for ice cream instead of making that call.

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Richard Olivastro is a professional member of the National Speakers Association, president of Olivastro Communications - an executive leadership development company - and founder of Citizens For Change.

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Note -- The opinions expressed in this column are those of the author and do not necessarily reflect the opinions, views, and/or philosophy of GOPUSA.