Government Can't Say How Much of $700 Billion Bank Bailout Will Be Spent
Government sources recently have given three different figures for how much will be left over--$33 billion, $100 billion and $135 billion.
“No one has any idea where the money is going or how much is left or where it went,” House Minority Leader John Boehner (R-Ohio) said recently in reference to the $700- billion TARP funds.
“Now the administration is talking about coming back and asking for more money,” said Boehner. “Give me a break.”
Boehner voted in favor of TARP, which passed last fall with only a minority of Republicans backing the bill and several Democrats voting against it. The legislation authorizing the money was pushed by President George W. Bush, and backed by both presidential contenders: Democrat Barack Obama and Republican John McCain.
A report by the Government Accountability Office (GAO) dealing with TARP funds was issued last week.
The GAO report states that, as the Treasury Department projected, the “maximum announced program funding level” for TARP was $667.4 billion, which would leave about $33 billion (out of $700 billion) in TARP funds unspent.
However, the Treasury Department announced in January that there have been adjustments to projected expenditures. Taking those adjustments into consideration, the GAO report concludes that $590.4 billion in TARP money will be spent, leaving a balance of a little less than $110 billion.
But whether the final balance is $33 billion or close to $110 billion, it is less than what Treasury Secretary Timothy Geithner told ABC News on Mar. 29.
“We have roughly $135 billion left of uncommitted resources,” Geithner told ABC’s "This Week." “Less is out the door, but in terms, if you look at what’s not committed yet, it’s roughly in the $135 billion range. That estimate includes a judgment, a very conservative judgment, about how much money is likely to come back from the banks that are strong enough not to need this capital to get through a recession.”
Boehner--in reference to the initially projected remaining balance of $33 billion and the now-claimed balance of $135 billion--said in a separate statement, “It’s time for the administration to fully explain this $100 billion discrepancy, and come clean with the American people about where the money’s going, how much they’ve spent, what effect it’s had, and if they plan on asking American taxpayers for more bailout money.”
A Treasury Department spokesman could not be reached for comment Friday after several phone calls.
The different estimates are based on different calculations, said Thomas McCool, author of the GAO report.
Most importantly, Treasury’s estimate includes getting at least $25 billion in loan payments returned from financial institutions. The GAO is not counting loans that are paid back, McCool told CNSNews.com.
“We don’t know how much will be paid back and Treasury doesn’t know,” McCool said. “So we think we should wait until it is actually paid back before we count the money.”
Other examples are that Treasury initially anticipated spending $250 billion on the Capital Purchase Program, but now projects spending $218 billion. Treasury also dropped from a maximum estimate of spending $100 million on the Term-Asset Backed Securities Loan Facility to spending $50 million.
While there are conflicting numbers on how much is projected to be spent, thus far, $303.4 billion out of the $700 billion has been spent, according to the GAO report. Most of that, $199 billion, went to 532 financial institutions under the Capital Purchase Program (CPP).
Although the TARP law says the money is for financial institutions, Treasury gave a $13.4 billion loan to General Motors and a $4 billion loan to Chrysler last December. The two companies have asked for additional $16.6 billion and $5 billion in loans respectively, pending a government-supervised restructuring.
The GAO report called on the Treasury Department to increase transparency and oversight, and had trouble assessing whether TARP was successful.
“Some indicators revealed that the cost of credit has increased in interbank and corporate bond markets and decreased in mortgage markets, while perceptions of risk (as measured by premiums over Treasury securities) have declined in interbank and mortgage markets and risen to corporate debt markets,” the GAO report said.
“In addition, although Federal Reserve survey data suggest that lending standards remained tight, the largest CPP recipients extended roughly $245 billion in new loans to consumers and businesses in both December 2008 and January 2009, according to the Treasury’s new loan survey,” the GAO report continued.
“However, attributing any of these changes directly to TARP continues to be problematic because of the range of actions that are being taken to address the current crisis.”