According to the quarterly report submitted in January 2010 to the Congress by SIGTARP, there is an overall shift in the focus. Efforts are on to lend to small businesses, mitigate foreclosures and deal with securities market that is asset backed rather than on bailing out banks.
By October 2010, TARP will completely wind down. The remaining funds amounting to $150M along with TARP’s other repayments amounting to $170M will be re-allocated to these focus areas.
Though our country’s financial system is quite stable, there are a whole lot of fundamental issues that have to be addressed immediately. According to the same report, though our country’s financial system was saved from falling off the cliff in 2008 by TARP, we are still driving, in fact in a faster car through the same winding mountain roads in the absence of effective and meaningful reforms.
According to September 2009 estimate by Bloomberg analysis, overall recovery spending by the US government stands at $11.6T. You can view this data at www.jobeconomics.com. Different agencies and programs are involved in the efforts. Some of the major players involved in the economic recovery effort include the US Department of Housing and Urban Development with $0.3T, $2.5T Federal Deposit Insurance Corporation, $2.9T US Treasury and the $5.9T US Federal Reserve System.
Stimulus programs initiated by President Obama and the TARP program are simply the tip of the iceberg. Highly hyped Cash for Clunkers Program at $3B is only one tenth portions of the total obligation of the treasury and 3/100th portion of the overall total. This minimal percentage is so negligible that it makes us wonder why our government should hype up this program so much at the risk of losing credibility.
As we all know, our country’s central banking system is the US Federal Reserve System. Fed is both the banker’s as well as the government’s banking. This institution is independent and has the right to act on its own and take vital decisions without prior permission or approval from the President or Congress. Fed is also not governed by the Congress budgetary process as it was created as a self financed institution by the Congress.
You can find many layers in the Federal Reserve System. Confirmed by the US Senate and appointed by the President himself, the seven member board of governors form the top layer. The present Fed board chairman is Ben Bernanke.
The regional Federal Reserve Bank districts number 12. Each district has a total of nine directors. Six of them are elected by the district commercial banks and three by the Federal board of governors.
There are at least 4900 member banks in the third layer mostly private institutions like state-chartered banks and national banks. Each member is entitled to a 6% annual dividend on their non tradable regional Federal Reserve Bank stock, subscription to which is mandatory for the members.
Their sister institution is the 9500 member FDIC or Federal Deposit Insurance Corporation. Lending institutions insured by the FDIC comprise of the majority of bank deposits in our country. For more details, log on to www.jobeconomics.com.