- Tom Silva
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$700 Billion Financial Bailout Plan Still Evolving
Treasury Secretary Henry Paulson is sitting on $350 billion dollars of the taxpayers’ money, and can’t quite settle on the best way to spend it. When approved by Congress in October, the $700 billion Troubled Assets Relief Program (TARP) bill’s purpose was to purchase bad mortgage assets that had frozen the credit markets. The Treasury Department has already used approximately half of the money to capitalize banks and prevent insurer American International Group (AIG) from going into financial default. The problem with the TARP bill is that conditions keep changing and Treasury is altering its focus to one of helping banks that are sound to stay healthy – with the ultimate goal of thawing credit. Meanwhile, Treasury is coordinating with the Federal Reserve to restore consumer confidence so people start buying cars, taking out student loans, or even using their credit cards again. The question is: which version of TARP eventually will unfreeze the debt markets. Given the complexity of the situation, there is no simple answer. Because both Wall Street and Main Street are equally impacted, TARP is likely to end up providing some amount of relief to both groups.
So, the question is, which TARP is it? We invite your comments.