Should we really be surprised at the latest word on TARP–the acknowledgment by Treasury Secretary Paulson that scooping up these “troubled assets” hasn’t been going so well?:
Treasury Secretary Henry Paulson said Wednesday that the government would broaden the reach of its $700 billion bailout plan to support non-bank financial institutions that provide consumer credit, such as credit cards and auto loans.
In this second stage of the bailout, officials also hope to attract private capital, possibly through matching investments, to give the government’s injections more heft.
Paulson also said the government is no longer planning to buy troubled mortgage assets, the original goal of the plan…
When the Treasury Department first announced the rescue plan in late September, it said it could help homeowners because the government could more easily modify mortgages if it owned the troubled securities.
Those “assets” have often been labeled, oxymoronically, not just troubled, but ”toxic assets” after all. Too bad the federal government had already made the decision that it was worth a $700 billion increase in the federal debt to “rescue” those troubled assets, and too bad that although they’ve now changed their mind, they’ve already burned through (essentially wasted) a lot of that $700 billion. Combined with this week’s news about relaxing the terms of the AIG bailout, we’re left with the sinking feeling that we can’t trust Secretary Paulson’s “reassurances” about the $700 billion (in what’s still officially the “TARP”) being the end of it:
Paulson said he does not have a timeline for when the Treasury Department would need congressional approval for access to the remaining $350 billion in the rescue package. At this time, he doesn’t think stabilizing the system will require more than $700 billion.
And of course, that’s even before we think about taking on the “troubled assets” in Detroit… I am worried about Detroit’s auto industry, but not exactly for the same reasons that the auto executives (and perhaps many of the politicians) are. I say it’s time to stop thinking about rescuing the (bad) assets and start focusing on rescuing the (good) people.
(See the nice Freudian slip that the Washington Post’s Dana Milbank caught Paulson making–at the bottom of this column.)