Loan Modification

Creative Accounting On Government?s Gain On TARP Funds

By Eugene S. Melchionne, Connecticut Consumer Lawyer

The US Treasury Department announced today that it recovered $200 Billion of the $700 Billion bailout for financial institutions.  Despite popular belief, the Bailout was not a free handout.  The money came with strings and the banks want out from under the TARP.

A number of banks have already paid TARP money back.  One of the largest recipients, Bank of America, has announced efforts to raise private money to pay back the government funds.

So the news outlets are touting that taxpayers will have to foot less of the bill than originally planned.  However, the news media has it all backward.  It is not because the government will find other ways to spend the taxpayer money, because it will.  Never mind that the taxpayers haven’t gotten the bill yet.  Or that the government’s profit of $20 Billion will be more than offset by losses of $60 on AIG, GM and Chrysler

No, the reason why the banks have paid back the TARP money is because they do not want to live under government supervision.  They don’t like the strings attached to the bailout money.  The regulations restrict things like excessive executive pay, unfettered bonuses, dividend increases, hiring of foreign workers, and overall corporate spending.  The firms that received funding under TARP must submit to the oversight and enforcement authority of the Office of the Special Inspector General for TARP, whose authority is to audit and investigate all aspects of the bailout.  Part of that oversight includes efforts to re-negotiate and modify mortgages on the verge of foreclosure and forfeiture.

So by repaying the money, lenders are free to continue to rampage the middle class, seize family homes and pay out huge bonuses to the executives for doing so.  As soon as the money is paid back, get ready for another wave of home foreclosures.  The worst is not over yet.

Related posts:

1. TARP and HAMP Require That Foreclosure Be Suspended
2. Government Response to the Mortgage Crisis
3. Citigroup To Lower Some Mortgage Payments

Full post as published by Mortgage Law Network on December 07, 2009 (boomark / email).