Saturday, November 29, 2008

Dragging heels at Treasury

At some point the process became apparent. The sky is falling, so if you are in the know and have the pull, you help yourself and your friends. Don’t plan too far ahead. Keep the green churning.

People were getting thrown out of work left and right at a significant rate on all strata. The folks reading the Times knew this. But capital - that was the animal that had to be fed.

The Treasury Dept now struggled to accomplish the task of hiring people to oversee the TARP. A bridge too far - because it lived and breathed. The breadth of the TARP plan had been continually narrowed. Why? It became much more a case of give the bankers some money and call that relief. Treasury Secretary Henry Paulson said the injections of the capital would be the best bet for stabilizing the financial sector - better than direct government purchases of distressed assets. And, anyway that would be hassle...

A story in the Wall Street Journal suggested that buying and moderating assets is just too much trouble. You'd have to hire people, you know? It too 'labor intensive.'

'Rescue Plan Strained by Lack of Staff' by Wash bureau staffer Michael R. Crittenden suggests there is a backlog of unprocessed applications for relief among banks, probably not the ones on Henry's tennis buddy list. From the Journal:

Outside observers said the difficulty of quickly building a qualified staff may be one reason the Treasury abandoned its original plans to use the TARP to purchase assets from financial institutions, deciding instead to inject capital into the banking system.

"I don't think that was a small part of why Treasury in the end abandoned the asset-purchase program. It's very people-intensive," said Wayne Abernathy, executive vice president of financial-institutions policy and regulatory affairs at the American Bankers Association.


Obviously the Bush administration has little heart for more than a shadow play on a wall. Hank looks tired, you know? America was the country of the Manhattan Project and the Moon Program. The former is a sore point with me. The IED issue in Iraq was posed as a challenge calling for an organization on par with the Manhattan project. But folks didn’t give up weekends; more than a few approached it as just another grant opportunity. There are about 40 full-time employees now working on TARP. The ratio of overseers to outflow remains pretty much on par for a Bush administration initiative. This is a real challenge for President-elect Barak Obama.

http://online.wsj.com/article/SB122783187912562983.html

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