TARP Looking More Criminal by the Minute

TARP Looking More Criminal by the Minute
The issue of TARP corruption may now extend from corporate CEOs and federal regulators to New York's attorney general.

By Donald Luskin

Is TARP a criminal enterprise? When a CNBC producer called me on Wednesday to see if I'd debate that question on the Kudlow Report that evening, I thought the allegation was ridiculous. How could the U.S. Treasury's Troubled Assets Relief Program to rescue the banking system possibly be compared to the Sopranos? But now I'm not so sure. Yesterday's sensational claims by New York Attorney General Andrew Cuomo — that Ken Lewis, CEO of TARP-recipient Bank of America, was pressured into what amounts to securities fraud by the Treasury and the Federal Reserve concerning his bank's acquisition of Merrill Lynch — throws the question right into the headlines. It raises issues of corruption all around, and at the highest levels — from corporate CEOs and federal regulators to Mr. Cuomo himself. What originally prompted my friend Larry Kudlow to ask if TARP is a criminal enterprise was Wednesday's report to Congress by TARP's special inspector general, Neil M. Barofsky, in which it was disclosed that "nearly 20 preliminary and full criminal investigations" are underway, including "large corporate and securities fraud matters affecting TARP investments, tax matters, insider trading, public corruption, and mortgage-modification fraud." When I first read that I rolled my eyes and said to myself, "Hey, what do you expect?" But then I started thinking a little more deeply and realized there's something more here — even before the controversy about Bank of America became known. The more I thought about it, the more I realized how that enormous pot of TARP money has in fact corrupted both the private and public sector. For example, Barofsky says he's doing an "audit" to respond to reports that "external parties may have sought to influence decision making by Treasury or bank regulators in considering and deciding on applications for funding" from TARP. Perhaps this refers to the controversy that surfaced last January when it was said that Barney Frank (D., Mass.), the powerful head of the House Financial Services Committee, intervened to get TARP funding for a favored constituent, Boston's OneUnited Bank. According to the Wall Street Journal, "Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection." Is that the "public corruption" Barofsky is talking about? Barofsky says he also is "auditing" the "Treasury's decision making regarding the first nine institutions to be considered for TARP funding in October 2008." His report says nothing more than that, but inquiring minds want to know — and this inquiring mind can guess.... *** my comment: Wow, if the underground mafia of Washington DC does not silence al this, which is now out of the bag,it will be huge and it will come home to roost on those big government elites in WashingtonDC .  Couldn't happen to a better group of guys.  And as Barney Frank starts to sweat, all the past will catch up with this latest mess he has done .  And as th eblood gets into the water, all the corruption will come to the surface.  By Polosi, Feinstein, Geithner, I bet the list is very long.