Mr. Paulson only has roughly 30 days left in office and somehow he is convinced that he needs to take down the second tranche of TARP funds…
From the WSJ (emphasis mine):
In the very short-term, the allocated but not yet disbursed TARP balances, in conjunction with the powers of the Federal Reserve and the FDIC, give me confidence that we have the necessary resources to address a significant financial market event. It is clear, however, that Congress will need to release the remainder of the TARP to support financial market stability. I will discuss that process with the congressional leadership and the President-elect’s transition team in the near future.
How exactly is this clear? What have the funds done to really help anything? The banks have been recapitalized on the liability side (deposits); however they are just dropping that back into the fed and earning interest on it. Credit is still jacked, consumers are still underwater, mortgages are a mess, home values are continuing to decline, we’ve entered the land of ZIRP and the fed is printing money. For Pete’s sake, why does the Treasury need more capital?
