The latest entry at Crashopedia is a partial transcript of a video interview from yesterday where Congressional TARP Oversight chairwoman Elizabeth Warren reveals the astonishing fact that Secretary Paulson misled her, the public and Congress about what equity and warrants the government got when it invested the first $350 billion in TARP funds into large US banks.
A few months ago Rep. Elijah Cummings asked Neil Kashkari (the former Goldman banker who now administers TARP funds for Treasury) if he thought Congress were “chumps” for letting the Treasury administer the first $350 billion in funds with little oversight and none of the intended effect of those funds, and then even thinking about coming back for more.
I wonder how Cummings and others who voted for the bailout feel now that Warren has disclosed this $78 billion giveaway and the attempts to conceal it.
Here is the Crashopedia entry:
Apr. 8, 2009 Bloomberg video interview with TARP Congressional Oversight Committee chair (and Harvard professor) Elizabeth Warren. She says that Secretary Paulson misled her, the public, and the Congress about the use of the first $350 billion in TARP funds. He told her the government was investing in equity in the banks, but her Oversight Commmittee research has shown that $78 billion was simply given to the banks as a subsidy. Here is a transcript of the video, which can be seen on YouTube, starting at 1:39.
“As Treasury is putting money into the banks, it describes it as “this is an investment” and Secretary Paulson said in a letter to me, in effect, for every $100 that the government is putting in to these financial institutions, they’re getting back $100 worth of stock and warrants. Now, we could have stopped there, because frankly that sounds like a pretty fair deal, but we decided to do an independent valuation of the transactions, crunched a bunch of numbers, did all the fancy equations, put it all together, and basically what it showed was for every $100 of taxpayer money that went into these financial institutions, we got back on that day about $66 worth of stock and warrants. Now do that enough times, and it adds up to about $78 billion dollars that were just subsidies, just given away. That’s not talking about how the market has fallen since then, it’s talking about on the day, the transaction was structured to give away about one in every three dollars that went into the banks.”
Q. Were you surprised by that figure?
“You bet. I have to say, when Secretary Paulson had sent me a letter assuring me that that was not happening, that these were par transactions, the way he described it, in other words 100 for 100, and it turns out that what the numbers showed was 100 for 66, yeah I was surprised.”
Q. What does that type of figure say to the taxpayer?
“It says that at least as Treasury started this program, they really had the notion that they would spend the money the way they wanted, and they not only weren’t going to tell the public, I don’t think they were really going to tell the Congressional Oversight people.
432 total views, no views today