Skip to main content

TARP To Bail Out White Collar Criminals

  • Author:
  • Updated:

Fortunately for all you evil doers out there, the various bail out provisions in the works (or already implemented) stand to benefit you too. Times are hard on fraudsters these days. Your Ponzi scheme is in danger of running out of cash, withdrawals are up, and due diligence has seen a huge growth spurt in the wake of Madoff and Stanford. What is a white collar criminal to do in this recessionary environment?
Steal TARP funds, of course.

"History teaches us that an outlay of so much money in such a short period of time will inevitably draw those seeking to profit criminally," Mr. Barofsky said in testimony for the afternoon hearing obtained by Dow Jones Newswires.
Federal regulators have already seen evidence of alleged TARP-related crime. In late January, the Securities and Exchange Commission charged a Nashville-based firm with defrauding investors of at least $6.5 million by claiming their money was invested in the TARP and other securities that didn't exist.
"If, by percentage terms, some of the estimates of fraud in those programs apply to TARP programs, we are looking at the potential exposure of tens if not hundreds of billions of dollars in taxpayer money lost to fraud," Mr. Barofsky said, noting that the total amount of money potentially at risk in TARP-related programs is approximately $2.875 trillion.

Hey, stimulus is stimulus.
TARP Fraud Could Cost Taxpayers Billions, Watchdog Warns [The Wall Street Journal]


Street Gangs Giving White Collar Criminals A Run For Their Money: WSJ

Groups like the "Outlaw Gangsta Crips" and "Van Dyke Money Gang" are making JP Morgan and co. their victims.

TARP Charts!

The Federal Reserve has this new paper out about TARP that does a bit of highly suggestive eyebrow raising about some banks that shall remain nameless. They start from the awkward fact that TARP wanted everything in one bag but didn't want the bag to be heavy, or as they put it: The conflicted nature of the TARP objectives reflects the tension between different approaches to the financial crisis. While recapitalization was directed at returning banks to a position of financial stability, these banks were also expected to provide macro-stabilization by converting their new cash into risky loans. TARP was a use of public tax-payer funds and some public opinion argued that the funds should be used to make loans, so that the benefit of the funds would be passed through directly to consumers and businesses. So you might reasonably ask: were TARP funds locked in the vault to return the recipient banks to financial health, or blown on loans to risky ventures, or other? Well, here is Figure 1 (aggregate commercial and industrial loans from commercial banks in the U.S.): So ... not loaned then. But that's not important! The authors are actually looking not primarily at aggregate amounts of loans but at riskiness of loans and here's what they get: