New TARP watchdog report cites poor progress and several fraud investigations


The Office of the Special Inspector General of the Troubles Asset Relief Program (SIGTARP) released a quarterly report today stating that although, Wall Street is beginning to regain its footing, Main Street has been showing “disturbingly persistent” signs of distress. 

While, TARP recipients have paid back $180.8 billion, taxpayers are still expected to shoulder a $127 billion loss. The losses incurred come from the $50 billion given to AIG, the $31 billion to the automotive industry and $49 to the housing market. 

According to the report even though “the financial system appears to be stabilizing and record profits are returning to Wall Street, the plain fact is that too many Americans on Main Street are still in imminent danger of losing their businesses, their jobs and their homes.”

Some highlights from the report:

  •  the average duration of unemployment was 31.2 weeks in March 2010, the highest since 1948;
  • small business lending remains lower than the pre-recession levels and 50 smaller and regional banks have already closed so far this year;
  • the states with the hardest-hit housing markets at the end of 2009 were Nevada, Arizona, Florida, Michigan and California.

Also, the real estate markets are still struggling with foreclosure filings and bank repossessions which increased this year by 16 percent and 35 percent respectively, compared to the first quarter in 2009.

Other than these, problems with the Home Affordable Modification Program introduced by the Treasury last year continues. Also, according to the report, there are 84 ongoing white-collar criminal and civil investigations regarding TARP fraud. In one case, The Park Avenue Bank in New York was closed when its former president and CEO were charged with bank, mail and wire fraud and embezzlement of up to $11 million in TARP funds.

In a similar case, another New York-based corporation, Mount Vernon Money Center was closed down, when its president and COO were indicted with bank fraud for allegedly stealing $50 million from their clients’ money, including institutions that received TARP funds.