Neil Barofsky is called the TARP cop because he is the regulator responsible for investigating the "money trail" of the TARP money: where it went, which banks got some, and what they did with it. All but about $134 billion of the original $700 billion of TARP money has been spent. The TARP money was given to banks to help them shore up their balance sheets.
It seems that one condition for receiving TARP money was proof that the banks receiving it were sound. Barofsky believes that some banks "cooked the books" to get TARP money. He is quoted as saying: "I hope we don't find a single bank that has cooked their books to try and get the money but I don't think that's going to be the case." Barofsky declined to discuss specific charges but did say that they could include securities fraud, wire fraud and false statements.
One of the key sticking points has been the pricing of "legacy" or distressed assets from banks. Barofsky went on to say, "we know that the triple-A rating (ascribed to the securities by credit rating agencies) was a sham. We could be buying securities that are backed with assets that we know were likely riddled with fraud."
He has recommended that the Treasury cease buying "legacy" assets because there could be continued fraud in pricing these securities.
Barofsky's report is due in a few weeks after a detailed analysis of what banks say they've done with the money.
Do you believe that banks "cooked their books" to get TARP money?
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Reader Comments (Page 1 of 1)
4-13-2009 @ 2:49PM
william lindblad said...
Given the scandals of today believing otherwise is equal to a belief in the tooth fairy.
4-13-2009 @ 3:45PM
Iridium said...
Yes, probably the safest yes in the history of the universe.
What is great is that the TARP money has allowed banks to cook the books even further to create a bull run on thier stocks.
In the real world they lost billions but in the fantasy land of Wall Street they made billions.
4-13-2009 @ 3:57PM
JCH said...
Any valuation system that ignores the percentage of performing loans within a collateralized debt obligation would be horrendously flawed.
That is why the financial statements last fall so wildly overshot the devaluation number. Such inaccuracy is dangerous to society and cannot be tolerated.