Following the Money: A Quarterly Report by the Special Inspector General for the Tarp: Hearing Before the Joint Economic Committee

Original publisher: Washington: U.S. G.P.O., 2009 LC Number: KF25 .E2 2009h OCLC Number: (OCoLC)501810417 Excerpt: ... 11 the program. One of the ... Show synopsis Original publisher: Washington: U.S. G.P.O., 2009 LC Number: KF25 .E2 2009h OCLC Number: (OCoLC)501810417 Excerpt: ... 11 the program. One of the goals of it is to restore public investor con-fidence in the system. Can I ask a final question? But in your report you raise issues about using the dollars that have been set aside for the Term Asset - Backed Securities Loan Facility, TALF, basically focused at consumer loans and using that to finance the Public-Private Invest-ment Program. You suggest it really undermines TALF's stated purpose of trying to deal with creditworthy consumers and small business. Can you elaborate on that? Mr. Barofsky. There are a number of concerns that we had in the expansion of the TALF. The program was designed for a cer-tain purpose, as you noted; and that purpose was inherent in the fraud and credit loss protections of the program. Applying that to legacy assets, these toxic mortgage-backed secu-rities, those protections don't really work. That is why we pre-viously made the recommendation to tread very carefully, and what we are encouraging Congress to do is really rethink those protec-tions. We have had discussions with the Federal Reserve as well as with Treasury; and they have indicated that they are going to be adopting our recommendations, at least to the extent that they are not going to at least be dropping the legacy mortgage-backed secu-rities right into the program. They are going to do - in response to our recommendations, they have indicated that they are going to do security-by-security analysis and also indicated that they may adopt our recommendation that certain types of mortgage-backed securities are just off the table. And those would be things - these securities that we know have been just riddled with fraud, the liar loans, the stated loans with no underwriting whatsoever, those types of things. So we are going to continue to push for those recommendations to be adopted. Representative Brady. Well, I just ho... Hide synopsis