U.S. Treasury Secretary Hank “The Tank” Paulson essentially admitted that the Treasury’s Troubled Asset Repurchase Plan (TARP) hasn’t worked and will now focus on consumer lending. Residents of post-Katrina New Orleans living with “FEMA blue” tarps on their homes will now note the irony.
Paulson Declares TARP Bailout Over
Drop the Partisanship, We’re In It Together
Now is not the time to play a Washington blame game, there will be a time to sort things out when the crisis has passed. Both parties in the House and Senate voted for this under extraordinary pressure, they were taken. Here is the roll call from each iteration of the TARP (the original failed bill and the later one that passed):
New Thinking and Better Ideas Needed
With all due respect, the current administration has botched the financial crisis. In short order we have had misdirected bailout funds, inaccurate statements from public officials about the state of the economy, misfeasance toward critical private sector institutions (Bear and Lehman) and now a mass waste of funds while critical time has lapsed.
The sitting administration needs to put together a better financial stabilization plan or else get out of the way. We will write up our ideas in an upcoming post, but in brief this plan should include:
- A full audit, triage and recapitalization of the entire US banking sector. Include mutual cancellation cross-cancellation of CDS/CDO securities for insolvent or government run banks to reduce the CDS/CDO market liability overhang.
- A rule change from no/haphazard regulation to smart regulation, including imposition of a financial transactions tax (FTT), a variation of a Tobin Tax to cover the FDIC, SEC and other Government agencies at user, not taxpayer expense.
- Solidify tax plans now including which of the Bush tax cuts to make permanent and which will rise.
- Restrictions on leverage in financial markets, replacement of leverage with government loan and investment guarantees.
- Enforcement of uniform accounting standards including mark to market.
- Leave Iraq and Afghanistan. Invest in domestic infrastructure, transit, IT and energy projects.
- Top up funding at the World Bank and IMF for international development, make US Government compliments to those agencies more efficient.
. . . And that’s how it goes