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Bush Asks for TARP II Funds: What Should Obama Do with $350B?

Posted Jan 12, 2009 04:28pm EST by Aaron Task in Newsmakers, Recession, Banking
Confirming speculation, President Bush on Monday formally asked Congress to release the second TARP fund, in order that the $350 billion be available for the incoming Obama administration.

The need for the remaining $350 billion is "imminent and urgent," Larry Summers, President-elect Obama's top economic adviser, declared in a letter to Congress.

While most economists agree the second TARP fund is needed to boost an ailing economy, the big question is how to use the funds. Most observers also agree the initial $350 billion TARP fund was misallocated and mismanaged.

Joshua Rosner, managing director of Graham Fisher and one of the first analysts to warn of a pending crisis in the mortgage- and other asset-backed securities market, joined Henry and I to discuss what should and shouldn't be done with TARP II:

  • Don't use TARP funds to prop up dying firms and make others compete with uneconomic capital. "If Citi truly is insolvent, we should put a bullet in its head [and] carve it up," says Rosner, who predicts other big banks will, like Citi, need more government money down the road.
  • Don't use TARP funds to renegotiate mortgages, as Barney Frank has proposed. Preventing foreclosures is a good goal but the re-default rate of people who get modified mortgages is "deeply troubling," he says.
  • Do place restrictions and conditions on TARP funds (or any other government bailout, for that matter).

84 Comments

blank
blank - Monday January 12, 2009 04:37PM EST

obama should put it back in the USA bank why waste another $350 billion

Art
Art - Monday January 12, 2009 04:40PM EST

“Hope and Change”??? The great masses of the people will more easily fall victims to a big lie than to a small one. A. Hitler

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 04:42PM EST

I think he should give it to me. I promise to lend it to whoever needs it and spend the rest.

mysterio
mysterio - Monday January 12, 2009 04:49PM EST

Amen, give the money back to the taxpayers. Or maybe it should be burned since it was just printed to give away... then more inflation wouldn't be an issue.

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 04:49PM EST

Money down a rathole...i can't believe we elected this clown who's going to piss away untold trillions on buying votes with pet projects. Sometimes democracy sucks.

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 04:49PM EST

Give it to any Financial Entity that has contributed to the "Capitol Hill Club" as a bonus.

Chester
Chester - Monday January 12, 2009 04:50PM EST

It's all a waste of money and it won't stop there.

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 04:50PM EST

I'd like to see the money given back to the taxpayers. That would help stimulate the economy among other things. -John

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 04:50PM EST

Whose fault is current financial mess? #1--Banks/Wall Street who were both stupid and greedy #2--Government--just stupid #3--Consumer--the credulity of a child

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 04:51PM EST

I'd like to see the money given back to the taxpayers. That would help stimulate the economy among other things. -John

Ryan
Ryan - Monday January 12, 2009 04:51PM EST

So what the F$%K happened to the first $350B? "Oh, sorry we stuck our head up our own ass"

Joseph
Joseph - Monday January 12, 2009 04:51PM EST

I say he should invent Alphabet Soup like FDR. ( http://freepages.genealogy.rootsweb.ancestry.com/~gazetteer2000/across/1934.htm ). Everyone should go around the country and look at the placks on buildings built with WAP money and labor and the Blue Ridge Parkway and all the enterances and exists and much much more that has survived. There are recordings and paintings and lots of other things that give meaning to our country that are left overs from the FDR Alphabet Soup. There were canneries that helped feed the nation, like the article i cut and paste above. Do some research online and see what the FDR programs left us with while helping the country recover from the economic pyramid that was contructed and brought the great depression collapse of the 30's.....and is the cause of the one we are just starting now.

Tom
Tom - Monday January 12, 2009 04:54PM EST

The only people getting modified mortgages are on the brink of bankruptcy already. If you want to stop foreclosures modify the loans on people not in default.

Bigdgti
Bigdgti - Monday January 12, 2009 04:57PM EST

I think the Goverment should give the money to Bernie Madoff. So we will get at least a steady return for a couple of years. At least we know what will happen with the money if he gets it. The same thing will happen if the Treasury release it to the banking Industry one day it will all be gone. Paulson did good by his Wall Street budies he gave them the goldmine we got the shaft.

Satisfied Customer
Satisfied Customer - Monday January 12, 2009 04:59PM EST

I do not believe there should be a next time around. TARP should be canceled.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Monday January 12, 2009 05:00PM EST

No Ba!!s Congress http://www.freewebs.com/rumorsconspiracybooks/Folder1/The%20Federal%20Reserve%20is%20PRIVATELY%20OWNED%20by%20Thomas%20D%20Schauf.pdf

__A_YAHOO_USER__
__A_YAHOO_USER__ - Monday January 12, 2009 05:02PM EST

Give the money to TechTicker,they will fix everything!!!

Yahoo! Finance User
Yahoo! Finance User - Monday January 12, 2009 05:07PM EST

The money should be used to create jobs. Handouts to anyone is a bad idea. Jobs, Jobs, Jobs

Steven S
Steven S - Monday January 12, 2009 05:10PM EST

It should be given to distressed homeowners to help them with their mortgages. It is obvious and has been for a long time that banks/mortgage companies don't really work unless the distressed homeowner accepts what the bank/mortgage company want to do. The distressed homeowner has had no say......well that should change..... wipe out all monies in arrears......drop the percentage rate to what banks loan to banks at.......extend terms......and have banks accept what the homeowner can afford not the other way around....add a third party agreeable to both parties...and finally ban lawyers from doing the work for banks/mortgage companies.....if they want to throw people on the street make them do it......... Only when banks and their mortgage companies are forced by law to work with distressed homeowners will they.......

Jack
Jack - Monday January 12, 2009 05:16PM EST

Hmm, let's think, what could be the worse thing they could do with it? Write blank checks to their friends? oh wait, we didn't that already, they need a new plan. have new people in charge so the friends change? OK, that's the new plan.

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