negotiate what he initially believed was a program designed to save main street but that he later discovered was really created with the full intention of bailing out Wallstreet.
Barack Obama on TARP
What is TARP
The Troubled Asset Relief Program (TARP) was created in October of 2008 to address the fiscal crisis by purchasing warrants and stocks from financial institutions so that those items no longer burdened the banks. The legislation outlines what items can be purchased, and defines the institutions from what institutions those items can be purchased. President Bush violated those rules prior to leaving office when he loaned money to General Motors and Chrysler. President Obama further violated those rules when he purchased stock in GM and then used the influence from those purchases to direct changes at GM.
Record as Senator
In addition to voting for the TARP program, Senator Obama spoke on the Senate floor in support of the program. In that speech, he urged his fellow Senators to "step up to the plate" and do the right thing in passing the legislation. He noted that a similar program had failed in the House and triggered a fall in the stock market. In supporting the program, he also urged it to have a program for home owners and an oversight board for the funds.
Second Half of TARP
After Senator Obama won the 2008 Presidential election, he asked President Bush to request the second half of the TARP funds to be allocated to TARP. In making the request, he stated that the economy was still too frail and that it would be irresponsible to enter office without having all the tools he needed to address the problem.
Request for Second Half of TARP
On January 12, 2009 President Bush stated that if President Obama desired the second installment of TARP funds, then he would move forward with the request. President-elect Obama immediately asked President Bush to request the funds.
"(it would be) irresponsible ... to enter into the administration without any potential ammunition should there be some sort of emergency or weakening of the financial system.
It is clear that the financial system, although improved from where it was in September, is still frail." Barack Obama on TARP
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TARP Subprograms
The Emergency
Economic Stabilization Act of 2008 (otherwise known as "the bailout")
created the Troubled Asset Relief Program (TARP). Some of the 9
subprograms initiated under TARP were in place prior to President Obama
assuming office. Other programs were initiated during his
administration. The programs initiated by President Bush include:
- American International Group
- Automotive Industry Financing Program (AIFP)
- Capital Purchase Program
- Targeted Investment Program
- Asset Guarantee Program
President
Obama has initiated numerous programs using the TARP funds. These
purposes of these programs range from helping people refinance their
homes to spurring lending for small businesses to welfare funds as shown
below:
- Small Business and Community Lending Initiative
- Home Affordable Modification Program
- Consumer and Business Lending Initiative
- Community Development Capital Initiative
- Public-Private Investment Program
- Hardest Hit Funds Program
- FHA Short Refinance Program
TARP and GM
The use of TARP funds to bail out General Motors is addressed in a separate item.
The purchase of stock and warrants from GM was not valid through TARP
as the GM and Chrysler are not financial institutions as defined by the
TARP legislation. The use of that stock holding as leverage to force the
CEO of GM out and to allow the US government to appoint chairs to the
board at GM is counter to guidelines of TARP which expressly forbid
purchasing stock with voting rights so that the government could not
assert influence over companies it had purchased shares of through the
program.
Funds Committed to TARP
The TARP program initially consisted of programs to deal with toxic assets. Those programs were extended by President Bush when he initiated loans to President Obama. President Obama further extended those programs to purchase stock in auto companies and then invest in local communities. Over 87% of the money issued by President Bush has been returned while roughly 9% of the money issued by President Obama has been returned. This data is current as of mid-March 2011 and taken from the TARP disclosure statements Barack Obama on TARP----------------------------------------------------------------------------------------------------------------------
A little perspective on the history and original purpose of TARP and President Obama's use and misuse of TARP 2 for GM, as an example. The Democrats caused the economic crisis funding the social-justice and class-warfare MEMES for power, called progress. We cannot afford four more years.
