TARP At Six Months: Report Delivers "Mixed" Emotions

Six months after Congress passed the Emergency Economic Stabilization Act of 2008, allowing for the $700 billion Troubled Asset Relief Program (TARP) allocation, a report issued by the Congressional Oversight Panel formed to monitor the federal bailout, labels the Treasury’s actions thus far under the watch of Secretary Timothy Geithner as “reasonable” if his office’s gauge of the actual depth of the economic downtown is accurate.

To date, the Treasury has spent or committed $590.4 billion of the available TARP funds, the panel estimates, while the Federal Reserve Board has expanded its balance sheet by more than $1.5 trillion in loans and purchases of securities. But “six months into the existence of TARP, evidence of success or failure is mixed,” the report says, adding that “evaluating the wisdom and success” of federal market intervention “requires a broader understanding of the basic choices available to policymakers during this crisis”—specifically pointing to liquidation, receivership, or subsidization.

The report safely concludes that success of the Treasury’s approach depends on which philosophy was correct in the long-term. Was the financial crisis the product of “temporary liquidity constraints, resulting from nonfunctioning markets for troubled assets” as Geithner and company have suggested? Or, does that approach fail to acknowledge the depth of the downturn “and the degree to which the low valuation of troubled assets accurately reflects their worth?” If the latter, the reports says, the Treasury will have a new path to forge.

The report certainly indicates progress, to say the least. Particularly when, just last December, Elizabeth Warren, the consumer bankruptcy expert who chairs the oversight panel, worried that TARP funds were being spent on an ad hoc basis, employing shortsighted tactical solutions in lieu of a coherent strategy.

Meanwhile, the Congressional Oversight Panel has its hands full. An April 13, 2009 article in The Wall Street Journal reported that the panel is assembling a new study that examines potentially inappropriate lending by banks that received TARP monies, such as annual interest rates that surpass 100 percent for some loans, and other rising fees and rates.

Crossing Silos: HUD, DOT, and Sustainable Communities

The Department of Housing and Urban Development and the Department of Transportation have unveiled a new partnership to help families gain better access to affordable housing, more transportation options, and lower transportation costs. The partnership eyes a reduction of housing and commuter costs by encouraging affordable, sustainable communities.

When the new initiative was announced in March, HUD Secretary Shaun Donovan and DOT Secretary Ray LaHood first discussed their plans for sustainable communities at a U.S. House of Representatives Appropriations Subcommittee on Transportation and Housing hearing titled, “Livable Communities, Transit Oriented Development, and “Incorporating Green Building Practices into Federal Housing and Transportation.”

An interagency task force was subsequently assembled to encourage federal transportation and housing investments and to identify strategies for affordable housing near places of employment, as well as pushing for lower transportation costs and shorter commutes (see Justin Massa’s “Equity 2.0: The Missing Pieces” on page 24).

Oprah Donates to Newark Nonprofits and Schools

A handful of Newark, New Jersey, nonprofits received some much-needed relief in a time of reduced donations from a surprising benefactor—Oprah Winfrey. In February, the talk show host and media mogul donated a combined $2 million in charitable gifts to Newark’s Apostles’ House, Robert Treat Academy, St. Benedict’s Preparatory School and Integrity House, a drug rehabilitation program building transitional housing for women, and Newark Now, a community support organization. All the organizations received $500,000 except for Newark Now, a nonprofit founded by Mayor Cory Booker, which received $250,000. The donations, first reported in The Star-Ledger, resulted from a list of organizations in need of additional funding provided to Winfrey by Newark Now.

The Green House?

We couldn’t resist the pun when news broke in March that Van Jones will serve as Special Advisor for Green Jobs, Enterprise and Innovation for the White House Council on Environmental Quality. Jones is expected to work with departments and agencies to advance the President’s agenda of creating 21st century jobs that improve energy efficiency and utilize renewable resources. Jones will also help to shape and advance the administration’s energy and climate initiatives with a specific interest in improvements and opportunities for vulnerable communities.

The appointment is viewed as something of a bellwether for the green jobs movement. Jones, a founder of Green For All, a national organization that promotes an inclusive green economy, and a New York Times bestselling author, could be pivotal in assuring major federal investments that support the growth of a green economy. In a 2008 Shelterforce interview, Majora Carter, a Green For All cofounder and founder of Sustainable South Bronx, called for a “Green New Deal” that included federal support, in addition to community support.

Just a Regular Maverick (Realtor)

Jim Klinge, the Realtor-cum-blogger who, first expressing pre-burst housing bubble incredulity, has since lit up the Web with an honesty rarely seen from a real estate agent. It’s not just that he’s telling the truth about his listings, it’s that many of his listings have become material for his ongoing (and often scathing) commentary on the housing market.

The broker, who operates in California’s North San Diego County, launched his blog, www.bubbleinfo.com, in 2005 when he saw prospective homebuyers emboldened enough to take on more debt than they could handle.

A recent blog surveys a 1,900-square-foot, 31-year-old home directly across from Interstate 5 (or the Detroit River, as Klinge refers to it) that sold for $1 million in 2006—the result of a “fraud deal” as Klinge speculates, noting that the purchaser financed $925,000 of the mortgage. The house, now an REO listed for $575,000 (“and that’s probably optimistic”) is replete with mold, a pool, and possible inhabitants already, as Klinge surveys the pool, he takes notice of a sign that warns against diving because of the shallow water: “This’ll be good for the homeless: they won’t hurt themselves out here.” But then realizes that all the doors to the house were open when he arrived so that “they’re probably living here now.”