TARP Talk: Short Attention Spans and Liars

Admit it.  You haven't thought about TARP in months, if not years.

Me neither.  Why would remind ourselves of such a painful blight on America's banking resume?  Or the equally painful kick-in-the-back-of-our-taxpayer-pants that accompanied it?

Four years ago, the federal government made the consequences of years of risking banking (for the love of God, would you loan some of these people YOUR money) the fault of you, dear American taxpayer, because some entity that you likely had little or nothing to do with was going bankrupt.  Old news, right?

Well, not if you care about the facts being right for posterity (or just tomorrow's headlines). 

The $700 billion bank bailout is currently referred to by Secretary of the Treasury Tim Geitner as an "investment" that has delivered "a significant profit for taxpayers."  

Seriously.  Seriously?!

First, there is something about the semantics of investment that suggests to me a voluntary aspect of the act of putting money into something offering the possibility of a return. Investment by fiat, rings controversial.

Second, there is NO possibility of return.  Nada. None. Zilch. 

I've borrowed the numbers from Aaron Task (ask Yahoo! Finance, The Daily Ticker) and applied third grade mathematics to support my bold statement:

The Congressional Budget Office estimates TARP will ultimately cost $34 billion, based on future expected payments. But Romero notes banks and financial institutions still owe $118.5 billion in TARP funds. Her estimate includes the government's ongoing stakes in companies like Ally Financial, AIG and General Motors, as well as $4.2 billion Treasury had written off and realized losses of $9.8 billion "that taxpayers will never get back."

The 'Romero' referred to is Christy Romero, the new special inspector general of TARP and persona non grata for telling things like they are.

For the very same reason that a barrel of apples consumed on one day cannot be made whole again by a half-bucket of regurgitated apple sauce a delivered a few years down the road, TARP can hardly be considered a profitable venture. 

And let's foray quickly into the "what if?" arena so popularized by this meltdown: TARP reinforced poor business practices that will prove doubly cataclysmic the next time the reaper comes calling. Again to borrow a Task statistic: "the five-largest U.S. banks now control 52% of the industry's assets." How could they possibly learn from a lesson that was never actually taught to them?

If only the government could take a page from the good parents of wayward teenagers.

It's ugly.  Don't let them try to make it prettier by lying to you about it.