Crisis Tally Made Easy: On the Road Towards $23.7 Trillion!
Wow ... Now I wish I'd been paying attention to this process all along.
Neil Barofsky, the Special Inspector General assigned to keep tabs on execution of the TARP program is preparing to issue its second quarterly oversight report to Congress tomorrow, and the details are looking rather juicy from this Fool's vantage point.
This Bloomberg article [http://bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM] cites Barofsky's estimate that before this is over, the crisis tally (which I stopped trying to count at $13.5 trillion [http://bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM] for logistical reasons) will reach an eye-popping $23.7 trillion! Tracking the total of potential outlays is the same methodology I employed in my periodic crisis tallies, so the $23.7 trillion estimate is directly relatable to the $13.5 trillion number I reported in March. So far, huge portions of the existing programs have not been utilized, but this assessment strongly suggests that the programs as presently structured will indeed be brought to their stated maximums if a further 40% increase in scale waits in the wings.
"Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs." Of course, Treasury spokesman Andrew Williams tried to brush off the estimate as insignificant because it represents only the maximum total outlays through the program, but this Fool has consistently argued that the scope of the programs as authorized remains a crucial measure of the scale of the crisis that remains before us. While talking heads are busy telling you the worst is over, the guy whose job it is to oversee the bailouts expects a further 40% increase in the total scale of crisis interventions by the Fed and the federal government from current levels. However you slice it, this is one moldy piece of bread America is about to swallow.
For Fools looking to do some homework, here's a link to the first quarterly report issued in April: [http://www.sigtarp.gov/reports/congress/2009/April2009_Quarterly_Report_to_Congress.pdf].
I will be delcing into the new report after its release, and hope to offer further analysis at that time. If anyone sees a YouTube link to tomorros Congressional testimony among their travels, please also post it here.
Of note, I find it incredible that the special investigator has already initiated "35 ongoing criminal and civil investigations that include suspected accounting, securities and mortgage fraud; insider trading; and tax investigations related to the abuse of TARP programs". In the 3 months since the last report, that number has nearly doubled from 20 cases. [http://www.cbsnews.com/stories/2009/04/21/business/main4958868.shtml] Glad to see none of those billions are being wasted like dropped marshmallows on a campfire.
This CNN report from April provides some of the bottom line from Barofsky himself (see the video): [http://money.cnn.com/2009/04/21/news/economy/tarp_cop_barofsky/?postversion=2009042103]
I'll be keeping an eye on these very important developments, and urge you to as well. Thanks in advance for posting relevant links, especially to tomorrow's Congressional testimony.
For a bit of (not so) comic relief, somewhat brought to my attention today a page on the Obama administration's Recovery.gov website, which highlights a $1.19 million award of stimulus money to a California meat packing company. The page has been changed since this morning, but this morning it indicated that the $1.19 million award was in consideration of 2 pounds of frozen sliced ham. At more than $590,000 per pound, that must have been one sweet honey ham! :) Likely a clerical error or misinterpretation, but ham purchases pretty much sum up what I think of the recovery act. [http://www.recovery.gov/?q=content/contracts-recipient-summary&id=12-AG3J14120297196&mode=details&primeid=27]