Posted by
Defend America on Thursday, December 10, 2009 9:14:27 AM
Abusing TARP
The wrong way to create jobs.
By Stephen Spruiell
Amid
talk that the Obama administration plans to use money from the Troubled
Asset Relief Program (TARP) to fund a new stimulus package, it is
important to understand what TARP actually accomplished, who benefited,
and who paid the price. A major component of the administration’s new
stimulus plan would eliminate fees and increase guarantees on loans
offered through the Small Business Administration (SBA). Small
businesses are the source of most job creation in the U.S., but they
are having a hard time finding financing in the current environment.
Obama’s speech at Brookings Tuesday stressed the need for government
action to get credit flowing again to this sector, but it did not
attempt to explain why such credit is currently hard to come by. That
might be because any honest attempt to do so would lead back to the
government’s flawed strategy for saving the banks.
Many banks
binged on asset-backed securities and related derivatives as the
real-estate bubble expanded. These assets soured as home prices fell
and home loans started to fall into default, leading to the bailout of
Bear Stearns, the collapse of Lehman Brothers, the rescue of AIG, and
the passage of the Emergency Economic Stabilization Act, which created
TARP. The Treasury Department under George W. Bush initially planned to
use the $700 billion TARP fund to buy troubled assets from banks and
other financial companies, thus repairing their balance sheets, saving
them from insolvency, and enabling them to lend again.
http://article.nationalreview.com/?q=NTgzYzJlMDBiNWIwMDBhNTk4ODY0NmQ3ZmE1MmMxZjU=