Not At All Surprising: TARP Is Ripe For Fraud

from the gee...-you-think? dept

Wed, Feb 25th 2009 3:27am — Mike Masnick

One of our complaints with the massive outlay of government spending through things like TARP and the "stimulus plan" is that they were both rushed through with little thought or oversight -- and no chance for those outside of Washington to weigh in on those plans. I'm not necessarily against all such spending, but history has shown that rushing into such spending without having a chance to think through the details is a recipe for disaster. Already, we've seen that the government has massively overvalued some assets and that the promised "transparency" has been lacking. Now, even the guy in charge of making sure that the TARP program isn't abused is admitting that, with the way it's been set up, the program is ripe for fraud. He's expecting the government to be bilked out of tens of billions of taxpayer dollars in criminal schemes, and notes that less than 5% of those receiving funds from TARP have fulfilled their obligations in letting the government know what's been done with the money. I keep hearing that the government had to do something, but that doesn't mean we needed to hand over trillions of taxpayer money in such a haphazard fashion.

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Filed Under: fraud, tarp

18 Comments

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Tim H, 25 Feb 2009 @ 5:26am

Accountability
Time and time again gov't programs fall into this pattern. Why is there so much slavish trust that "this time it will be different"? It would be nice if the public demanded, loudly, that our leaders (Congress and Presidents alike, both sides of the aisle) be accountable for the results of the programs, rather than getting full credit for only the implementation.
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Haywood, 25 Feb 2009 @ 5:31am

Taxpayer Anal Rape Program
I heard the head of a local school district (who had 30 million of funds go missing) say now it would all be good.
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eleete, 25 Feb 2009 @ 5:51am

Not to be repetitive
If you had a stack of $1000 bills four inches high you would have $1 million. How high is that stack of $1000 bills to make $1 Trillion. Answer 63 MILES high.

So the question becomes, for those gaming the funds, who will miss this 4 inches, Or that 16 inches, when there are 63 MILES of $1000 bills.
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Rob, 25 Feb 2009 @ 5:53am

YES! for Accountability!
Oh things would be so much different if politicians were required upon election to liquidate all of their assets and deposit the money in the general fund. Once their term of office was over, a mathematical formula would determine if they helped the economy or hindered it, and the return of their personal funds would be adjusted to match.

In short, screw up and you yourself go broke. How many politicians would support pork bills with nothing but junk in them once that was enacted? Ya, none.

Can we do this now, please?
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eleete, 25 Feb 2009 @ 6:11am

Re: YES! for Accountability!
Who would enact this ? Our polluticians ? They're too busy voting for their own raises in a downed economy. I'm not gonna hold my breath, but I like the idea.
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MadJo (profile), 25 Feb 2009 @ 6:13am

Obligatory joke
It's a TARP!
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4ward, 25 Feb 2009 @ 6:49am

Recall misused bank bailout
What if the banks and greedy brokers that created this fiasco had their bail out funds recalled? Can we call that a stimulus plan since it would do more to stimulate confidence in the values of the free market? Tax payer bail out of the financial sector flew in the face of all the rhetoric. Amazing that so little outrage has been directed towards the people that caused this mess, instead they were rewarded and without much public outcry. What's REALLY going on there?
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Liberty Dave, 25 Feb 2009 @ 7:35am

No kidding?
What a surprise, that government spending is rife with fraud. The federal government trying to rescue the economy by spending tons of taxpayer money is a joke. It won't work, not in the short term or the long term. If the economy recovers it will be "in spite of" the federal government's idiocy, not because of it.

As the article by George Reisman points out (http://mises.org/story/3353) our economic system is not functioning correctly because of loss of capital, which is accumulated "...on a foundation of saving."

"Saving does not mean not spending. It does not mean hoarding. It means not spending for purposes of consumption. Abstaining from spending for consumption makes possible equivalent spending for production. Whoever saves is in a position to that extent to buy capital goods and pay wages to workers, to lend funds for the purchase of expensive consumers' goods, or to lend funds to others who will use them for any of these purposes."
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Comboman, 25 Feb 2009 @ 7:51am

TECH-dirt?
I see the dirt, but where's the tech? How is this story relevant to a technology site?
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DCX2, 25 Feb 2009 @ 7:57am

Stimulus is better than TARP, Iraq
With the Stimulus, that tax money will be spent to benefit taxpayers. It will build new roads for them to drive on, and so on and so forth.

With TARP, the tax money helps some rich guys stay rich.

Still, I prefer TARP to the Iraq war, where my tax money destroys infrastructure and lives.
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Tim H, 25 Feb 2009 @ 8:20am

Re: Stimulus is better than TARP, Iraq
With the Stimulus, that tax money will be spent to benefit taxpayers.

This is, in my humble opinion, a big assumption. A point of this is a need to accomplish redical transparency...transparency is also as noted in the links above. Personally, I'm skeptical that much of the "simulus" is to benefit taxpayers. Sure, it will a little, but it seems to be pennies of benefits to us vs. dollars of benefit to the policiticans' "hey, lookie what I did" fund. Wouldn't it be good to have the authors of the bill, and those who voted for it, but praised, or dinged, if it doesn't meet it's stated goals (assuming there are event goals documented...which I'm not clear they are)?

As a side note, I like rich people...they employ me. But alas, there are bad apples in every bunch.
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JB, 25 Feb 2009 @ 8:22am

Re: TECH-dirt?
How is the economy NOT related to technology?
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jonnyq, 25 Feb 2009 @ 8:33am

Accountability can be expensive. You have to weigh the cost of an oversight program against the amount that will undoubtedly be wasted without oversight plus the amount that will be wasted anyway even with extra oversight. (Overseers often have their hand in the pot.)

For example, after hurricane Katrina, we gave out $2000 debit cards for people to buy food. Of course, some of those people used the money to buy TVs. Also, since it was important to get those debit cards out really fast, you have to assume that some people are going to get debit cards that really don't deserve them. Sure, you could add more red tape to the process, but that just increases the amount of time it takes for real victims to buy food. You have to have a certain amount of trust in people and accept a certain amount of loss, if you want to get relief to victims quickly. Otherwise, you just slow down the process without really saving any money.

TARP is really the same thing except that we're handing out multi-million dollar debit cards to corporations. Of course there's going to be waste, people getting money that don't deserve it, and people using the money to buy things other than the intended purpose. If you want the money to get out quickly, that's the way it had to happen. Anything else just slows down the process and adds expensive bureaucracy that doesn't save much money anyway. Sure, we can go after those that really did commit some sort of fraud, but did you really expect anything different? Do you really expect more oversight to save that much money?

The money should never have been given out in the first place. Asking why there wasn't *more* government oversight to make things *cheaper* is just silly.

You can't have things fast, cheap, and good. You can only pick two.
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Anonymous Coward, 25 Feb 2009 @ 8:40am

Obama gave a memorable speech, the only problem is, some of his words reminded me of speeches given by GWB, Bill Clinton and Ronald Reagan.

We want to hold the banks responsible for the tax dollars given them? Why didn't the douchbags sitting in that room already do that? We want to reduce the deficit in the future? Again, the same people listening to that speech had a chance to do that already. Improve education? Yeah, been there, done that. Healthcare? hahaha, how many have talked grandly about that? Have those guys in the room changed that much?

GWB scared us with terrorism, Obama is scaring us with the economy. For months it has been doom and gloom, now that the spending bill has passed, we hear the positive. Gee, think that is a coincidence?
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Tim H, 25 Feb 2009 @ 8:51am

Re:
AMEN! to this:

The money should never have been given out in the first place. Asking why there wasn't *more* government oversight to make things *cheaper* is just silly.
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Lickity Split, 25 Feb 2009 @ 8:52am

Re: Recall misused bank bailout
Don't just blame the bankers. You also have to blame the idiots who bought a $400,000 house when they made $35,000 a year and thought that getting and interest only loan was a good idea because the value of the house would go up and they would refinance. Never mind the fact that their income had no prospects of increasing and that they barely qualified for the interest only loan in the first place so qualifying for a 6% 30 year fixed would be out of the question....But hey look at how successful they are with their big house and all.
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Chris H. (profile), 25 Feb 2009 @ 9:23am

Re: Re: Recall misused bank bailout
@16.

Who's the bigger idiot? The guy who bought a $400K house or the idiot who lent him the money? The real question is who should have known better, and that is clearly the bank who gave him the loan. Banks thru away all their lending standards for greed and they should pay the price.
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Michael, 25 Feb 2009 @ 11:15pm

Re:
This is why you publish the 'books' (accounting database) to the public as information on how their tax-dollars were spent. Then you allow the public to scrutinize the data and you have strings attached to the money making those involved liable for any such wastes.

In this way, the heavy lifting part of the problem is divided among everyone who cares to spend time on the task. It would also restore public confidence and give everyone out of work something to put on their resume as having done.
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