TARP confuses me

I've tried to follow this TARP fiasco but I get so confused. For a while I thought I must be the dumbest air head in the country till I started to get emails from other people who said they were just as confused as I was. I'm trying to learn something from this mess but when I try to make a list I get writer's block.

Back in my internal auditing days I used to analyze a department by asking:

• What is the mission of the department?
• If the department didn't exist how would that hurt the company?
• What are the measurements in place to evaluate the department's effectiveness?
• Does the department have the tools and resources to complete their mission?
• Are the benchmarks effective in evaluating the department?
• If the department is not completing it's mission how do we fix that?
• How much will the fix cost?
• Will it cost more to fix it than the benefit the company will receive?
• How can we tell if the plan to fix it was wrong or the plan was just poorly executed?
• Should personnel changes be made?

Have we answered or even asked these basic questions for TARP?

When this whole mess came about our President promised 2 things: First, this was not a bailout. It was an investment by the taxpayers because the financial institutions would transfer an equity ownership to the taxpayers, pay interest and fees and eventually we would sell the assets at a profit. This was not corporate welfare that would never be paid back. Now he says it will not cost as much as he thought. What happened to the profit he talked about?

The second thing this administration promised was transparency. I don't know about you but to me transparency means everything out in the open, an honest accounting and explanation that the general public would understand.

The legislative branch and the SEC and who knows who else is investigating the banks but who is investigating them?

My questions before TARP were:

• Why didn't the external auditors value the assets properly?
• Why didn't the SEC publish warning flags?
• How did all the rating agencies like Moody's Standard & Poor's and Fitch miss the credit problems?
• How could all the analysts at the Wall Street brokerage firms fail to see the warning signs?
• Why didn't the FDIC have these institutions on a Credit Watch list?
• When the toxic assets were packaged as investment grade was there a conspiracy to defraud the public - was it salesmanship puffing or outright fraud?
• Were the laws and regulations inadequate to protect us or can it be blamed on lack of enforcement?

None of these questions have been answered!

My questions on TARP are:

• How much money was really needed?
• Who made the decisions and what data were they using?
• How was the money used?
• Everyone says loans to the public were not made so what was the money used for?
• Citi wants to pay back the money. Since they haven't made a profit in years and they aren't making loans to generate interest income where are they getting the money to pay back the program? Did they even need the money in the first place?

TARP should be a case study in business schools for years to come on how not to regulate an economy. TARP should have it's letters rearranged to TRAP.

There are lessons to be learned but the Administration is not asking for the accountability of the funds so I'm not sure if we will ever learn anything from this recession.

Pollsters tell us investor confidence is up but I'm still not sure who is adequately protecting me from "the beasties and ghoulies and things that go bump in the night" in the financial world? My confidence isn't up how about yours'??

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com.