TARP is Just Too New to Rate (TNTR) - Well, At Least They Are Being Honest
The person Hank Paulson put in charge of the bail-out plan came forward and basically said that the TARP (the bail-out plan) has not been working long enough to know whether or not it will work. Text in bold is my emphasis. From CNNMoney.com:
Neel Kashkari, the Treasury Department's point man for the bank bailout, said Friday he was encouraged by progress made thus far but acknowledged that more work lay ahead.
Speaking in New York City at a conference sponsored by the Wharton School of the University of Pennsylvania, Kashkari took on many of the tough questions that have surrounded the government's Troubled Asset Relief Program, or TARP, in recent weeks.
Among those were concerns about whether banks that sign up for government capital would in fact use the money for what it was originally intended - lending to consumers and business.
Kashkari noted that money has not even been released to many of the participating banks yet so that it was still too early to see the effect of the capital purchase program.
"The first piece isn't even out the door yet," he said.
There has also been talk in recent days that the program could be extended to insurance companies and other specialty financial firms as well as to companies in other sectors, most notably struggling automakers.
Kashkari indicated that everything was on the table.
"We are looking at everything," he said. "We are trying to figure out what will provide the most benefit to the financial system."
He added that his agency was not attempting to force consolidation in the nation's banking system by providing government funds to stronger banks and denying money to weaker ones. But he acknowledged that this would help bring life back to badly beaten sector. (Hang on there. Why wouldn't you support the strong banks versus the weak banks. Also if this forces consolidation in the industry, then next time the weak banks should listen to Risk Management and stop worrying about getting rich.)
"Prudent mergers and acquisitions can be very good for the financial system," he said.
Kashkari, a Goldman Sachs alumnus who was appointed interim assistant secretary for financial stability in early October shortly after President Bush signed the $700 billion rescue package into law, also said that his team would work to ensure a smooth transition for the new administration of President-elect Obama.
"The next team may have their own ideas," he said. "We have to make sure it is a smooth handoff."