Neil Barofsky, the TARP Inspector General, comes back today with a by-now old classic.
Banks aren’t using the cash for lending, as would be proper, but are instead using it to make investments, or to repay debt, or in some cases — gasp! — to make acquisitions.
The Treasury has fired back with, again, the same old response: Money is fungible. It’s impossible to say which cash is going where.
This debate is really tired, and we think Barofsky is being disingenuous, perhaps because as IG he has to justify his work.
Here’s the thing, and it’s really pretty simple: No matter what politicians were saying at the time, TARP wasn’t passed to spur lending, and it wasn’t an investment. There were fears of a run on the bank, and the solution was to just take a whole big chunk of taxpayer money and throw it at the system. That’s it.
It was a blunt measure, and the long-term consequences of it we may come to regret, but it pretty much worked.
To, after the fact, go back and say, “Ah, but you said it was about lending, and banks aren’t lending,” is just silly. That was never the point, and Barofsky, presumably, knows that, otherwise we should get a more informed IG. Besides, since when does anyone who’s serious take Congress at its word? That’s his first problem right there.
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