People wait to be served at the Sugartree Ministries soup kitchen January 29, 2009 in Wilmington, Ohio.
The Treasury has too much to do. It will delay talking about its new overhaul for banks until Tuesday while it works with Congress to help finalize a new stimulus package which may have a $800 billion price tag. It also has to prepare plans for how it will work with the Fed and FDIC to pull the financial system back together.
None of those things get to one of the core problems, which is that the top people at the Treasury are new.
The Treasury has too much to do. It will delay talking about its new overhaul for banks until Tuesday while it works with Congress to help finalize a new stimulus package which may have a $800 billion price tag. It also has to prepare plans for how it will work with the Fed and FDIC to pull the financial system back together. (See who's who in Barack Obama's White House.)
None of those things get to one of the core problems, which is that the top people at the Treasury are new.
The failure of the federal government to act quickly enough to arrest the decline in the economy before the end of this year now appears to depend not so much on whether the funds are approved as the extent to which Congress and some parts of the Administration can put them into law and manage them as ongoing programs.
The Treasury not only wants to spend the TARP in ways that Paulson did not. It wants to create independent oversight to make sure that all decisions about the money are reviewed promptly. That puts yet another wheel on the wagon.
While Congress may support the Treasury's desire to have a blended bailout of the banks which includes government and private money, coordinating how those investments will go into financial firms and how it will be determined which piece of the pie private equity will get may be beyond the capacity of the personnel that the department has in place.
Congress has a similar problem. Leadership from the Speaker to committee chairmen are running from one problem to another, hoping to put out fires before new ones flare up. By stretching the capacity of people to do more than a hundred things at one time, the system risks doing none of them well.
In addition to getting private equity involved, some of the money from the remaining TARP capital may go to mortgage relief. According to MarketWatch, "The Treasury Department also is expected to use between $50 billion and $100 billion of the bank bailout program to fund a mortgage-mitigation proposal to help troubled homeowners avoid foreclosure." How does that series of programs get administered? No one knows.
The Congress and Treasury may save the U.S. banking system and rescue mortgages which would normally go into default and move toward foreclosure. The programs may all look perfect on paper. In reality, it has become clear that when the issue of who will actually make the programs work comes up, there are not enough qualified people to go around.
— Douglas A. McIntyre
Read "Four Steps to Ending the Foreclosure Crisis."
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