Friday, January 16, 2009

Thoughts on the TARP

When I first heard about the TARP (the Troubled Asset Relief Program) I turned to my husband and said "Uh..oh. This means trouble!" I've worked implementing and managing Federal funds for 20+ years. I've done it as a private consultant and as a political appointee. The number one rule about dealing with Federal money is that first come the regulations and THEN comes the actual money. If I give you the money first there's no reason for you to pay attention to me when I start jumping up and down, demanding that you do annoying things like honor the actual reasons you're supposed to use the money I gave you. Anyone whose ever suffered through a Federal audit can attest to just how mean spirited some of those auditors can be when it comes to proving what you spent your money on. Somehow I can't imagine Citibank or the Bank of New York suffering through that type of audit a few years down the road. But I digress which I do constantly or so my husband tells me.

I've actually enjoyed reading some of the articles out there about the TARP. Everyone has an opinion, especially economists. The financial institutions (the big boys) that got money from the "first wave" of funding said they needed it to enable them to provide credit to everyone from big and small businesses to individuals needing mortgages. Congress got pretty upset when they found out the bailout funds they gave to the big banks was being used to buy other banks. Kind of like saying you need a student loan to pay your tuition but actually using the money to buy a car. People get really testy about things like that. Now if you or I pulled a switch like the banks are accused of we'd be under the jail but when you're talking about millions of dollars the rules get a little grey. These among many others are also the reasons Congress didn't want to give our new President the second part of the bailout funds - $350 billion dollars. But they relented. Personally I've been struggling financially for almost twelve months now - fighting to keep my small house out of foreclosure. A mere $5,000 would go a long way to help. Tomorrow I'll tell you about the many, many hoops I've had to jump through just to get considered for one of the Federal foreclosure prevention programs. I warned you I tend to digress.

So the bottom line on the TARP is that the President-elect is planning to impose the regulations that weren't imposed on the first $350 billion. I'm beginning to think of all this like stacking sandbags against a flood. The floodwater's keep pushing out the sandbags so we run down and redo the dam. It's too scary to even think about what happens if the auto industry, the banking industry and the housing industry don't get the money they need. But on the other hand those in the know say there just isn't enough money to go around. I really am starting to worry about what kind of debt (remember the TARP is borrowed tax money) I'm leaving for my three grandchildren to deal with.