They Lied: Watchdog Says Treasury and Fed Knew Bailed-Out Banks Were Not 'Healthy'

[masuki bance]

They Lied: Watchdog Says Treasury and Fed Knew Bailed-Out Banks Were Not 'Healthy'
Before the $700B Bailout, Senior Government Officials Had Financial Concerns About Nine Bank Instiutions Receiving TARP Funds

By MATTHEW JAFFE
WASHINGTON, Oct. 5, 2009

...Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), says that despite multiple statements on Oct. 14 of last year that these nine banks were healthy and only receiving government funds for the good of the country's economy, federal officials knew otherwise.

"Contemporaneous reports and officials' statements to SIGTARP during this audit indicate that there were concerns about the health of several of the nine institutions at that time and, as detailed in this report, that their overall selection was far more a result of the officials' belief in their importance to a system that was viewed as being vulnerable to collapse than concerns about their individual health and viability," Barofsky says.

...

Since last October, the bailout has generated widespread outrage. While supporters say it saved the system from collapse, detractors say it helped only Wall Street and not Main Street, since banks have not boosted lending and unemployment and foreclosures have risen.

Barofsky, who last month called it "highly unlikely" that taxpayers would recoup their full investment, says the government's "inaccurate statements" last fall only made the program more controversial.

Watchdog: Inaccurate Government Statements Will Damage American Trust

"In addition to the basic transparency concern that this inconsistency raises, by stating expressly that the 'healthy' institutions would be able to increase overall lending, Treasury may have created unrealistic expectations about the institutions' condition and their ability to increase lending," Barofsky says. "Treasury and the TARP program lost credibility when lending at those institutions did not in fact increase and when subsequent events -- the further assistance needed by Citigroup and Bank of America being the most significant examples -- demonstrated that at least some of those institutions were not in fact healthy."

"The lesson is straightforward," the watchdog advises. "Accuracy and transparency will enhance the credibility of Government programs like TARP and restore taxpayer confidence in the policy makers who manage them; inaccurate statements, on the other hand, could have unintended long-term consequences that could damage the trust that the American people have in their Government."...

http://abcnews.go.com/print?id=8748299

I think we knew this.

[xchrom]

1. weapons of mass destruction and The Financials!

bushco loved big lies -- really really big lies.

[Lasher]

2. Well it worked to get Part D passed.

What's just one more little tiny lie to wrap up Junior's 8 catastrophic 8 years?

[indepat]

4. Now ain't it all f'in special?

:P

[blueworld]

3. My "outrage" battery is dead. Kaput. RIP

Hanky Panky Paulson, writer extraordinnaire, who crafted a 3 page memo to outline the vital necessity for a giant TARP bailout & tried to ram it through Congress in 2 weeks LIED?

A bonafidee member of the Boosh administration lied to Congress & the American people in order to grab power & bucks for himself & his Wall Street buddies at the expense of our grandchildren? Mr. Financial Wizard conned us into a loan he knew he couldn't afford & lied about paying us back?

Nope. Battery is still dead. My teeth aren't even buzzing a little. :sarcasm:

[xultar]

5. Why would you bailout a healthy bank?

:shrug:

[Phx_Dem]

6. I sure hope so. Otherwsie, why give them federal funds?

Duh.

[Phoebe Loosinhouse]

7. Aren't most of the "toxic assets" still just sitting in the books waiting to explode

if a true valuation is given?