Understanding Government

In order to pay for financial regulatory reform, Congress transferred what funds remain from the Troubled Asset Relief Program a/k/a TARP (a/k/a the $700 billion bailout of Wall Street marked by its unpopularity — and success in stabilizing the financial market). Paul Merrion of Crain’s Chicago Business reports that this is unlikely to affect banks that have applied for TARP money, such as Chicago’s ShoreBank. (more…)

Building off Ned’s post this morning on increased national home foreclosures . . . the Washington Post’s Renae DeMarle reports that the increase is specifically due to the winding down of direct government interventions in the mortgage market: (more…)

TARP’s main mortgage-modification program has not helped enough homeowners avoid foreclosure. Moreover, the homeowners who have been helped are disproportionately white. (more…)

The Washington Post’s Binyamin Appelbaum and David Cho report that while the nine huge banks that took part in the Treasury Department’s Troubled Asset Relief Program have repaid their loans, “hundreds of community banks” have not returned their TARP money. Some of these community banks are “struggling with losses on real estate development loans,” while others were dubiously selected as bailout recipients.

This news about community banks is a disquieting plot twist in the narrative that TARP is a surprise success. The quick return to profits by the biggest banks (Goldman Sachs, J.P. Morgan, etc.) coupled with the failure of community banks could lead to greater consolidation in the banking industry. If dozens of community banks go under, consumers must go to a big banks, that likely do both commercial and investment banking. So financial firms “too big to fail” will become even bigger. Perhaps the final legislative outcome of Chris Dodd’s financial regulatory reforms will address this problem.

John Cassidy’s New Yorker profile of Tim Geithner mostly makes a single argument, with that argument contained in the  sub-head: “Timothy Geithner’s financial plan is working — and making him very unpopular.” This has become the prevailing wisdom on the Geithner beat — summarized equally well a few weeks ago by the Wall Street Journal’s Deborah Solomon. This part of Cassidy’s conclusion, though, is fresh and interesting: (more…)