Top TARP Cop Warns: The Bubble Is Back<http://www.housingwatch.com/2010/02/03/top-tarp-cop-warns-the-bubble-is-back/>
By *Alyssa Katz* <http://www.housingwatch.com/writers/alyssa-katz/>*[image: http://www.housingwatch.com/writers/alyssa-katz/rss.xml]*<http://www.housingwatch.com/writers/alyssa-katz/rss.xml> Feb 3rd 2010 @ 8:00AM With home prices continuing to plummet every month, it may be hard to believe. But it's now officially government policy to keep those home values as high as possible. And Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program, doesn't like it one bit. In his latest quarterly report to Congress<http://www.sigtarp.gov/reports/congress/2010/January2010_Quarterly_Report_to_Congress.pdf>, Barofsky accuses the Obama administration of recklessly reinflating the real estate bubble in an attempt to keep the housing market going and prevent the collapse of financial institutions. SIGTARP -- not a Bond villain but Barofsky's shorthand title -- sums up all the sundry spending in one handy place. The Federal Reserve has been buying mortgage-backed securities and other mortgage-related debt in enormous volume, projected to reach $1.2 trillion by the time the effort expires at the end of March. Treasury is spending hundreds of billions more to capitalize Fannie Mae and Freddie Mac, so the agencies can continue to finance home mortgages. Congress has extended the $8,000 tax credit for first-time homebuyers and added a $6,500 credit for existing owners buying new homes. And while Treasury's $75 billion Home Affordable Modification Program is designed to forestall foreclosure for homeowners, its direct (and intended) effect is to keep home prices high. Combine all that spending to boost home prices with a still-bloated financial industry – too big to fail, expecting to get bailed out, and rewarding executives with huge bonuses in exchange for taking big risks – and, warns Barofsky, the U.S. financial system is headed for The Great Crisis, Part II. "Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," cautions the report. It's old news that the feds are reinflating the bubble by propping up prices -- I wrote about it while George W. Bush was still president. But it's still a big deal to have a critic as influential as Barofsky. He is a prosecutor - a former assistant attorney general in New York specializing in mortgage fraud. When he says price inflation is not just a waste of resources but a dangerous development, we'd all do well to listen. __._,_.___ Reply to sender<[email protected]?subject=the+housing+bubble+is+back+and+obama+caused+it+,,,,+Tarp+Official+Warns+,...>| Reply to group<[email protected]?subject=the+housing+bubble+is+back+and+obama+caused+it+,,,,+Tarp+Official+Warns+,...> Messages in this topic<http://groups.yahoo.com/group/texas_net/message/46813;_ylc=X3oDMTM2N2NmNGFhBF9TAzk3MzU5NzE0BGdycElkAzExMTIwMjMEZ3Jwc3BJZAMxNzA1Njc2OTY0BG1zZ0lkAzQ2ODEzBHNlYwNmdHIEc2xrA3Z0cGMEc3RpbWUDMTI2NTM2MzU3MgR0cGNJZAM0NjgxMw-->( 1) Recent Activity: - New Members<http://groups.yahoo.com/group/texas_net/members;_ylc=X3oDMTJmbGdjdTkzBF9TAzk3MzU5NzE0BGdycElkAzExMTIwMjMEZ3Jwc3BJZAMxNzA1Njc2OTY0BHNlYwN2dGwEc2xrA3ZtYnJzBHN0aW1lAzEyNjUzNjM1NzI-?o=6> 2 Visit Your Group<http://groups.yahoo.com/group/texas_net;_ylc=X3oDMTJlNnVjZWJqBF9TAzk3MzU5NzE0BGdycElkAzExMTIwMjMEZ3Jwc3BJZAMxNzA1Njc2OTY0BHNlYwN2dGwEc2xrA3ZnaHAEc3RpbWUDMTI2NTM2MzU3Mg--> Start a New Topic<http://groups.yahoo.com/group/texas_net/post;_ylc=X3oDMTJldWs4ZWpoBF9TAzk3MzU5NzE0BGdycElkAzExMTIwMjMEZ3Jwc3BJZAMxNzA1Njc2OTY0BHNlYwNmdHIEc2xrA250cGMEc3RpbWUDMTI2NTM2MzU3Mg--> To View The Texas Net DISCUSSION PAGE Online: http://groups.yahoo.com/group/texas_net/ To unsubscribe, send a message to: [email protected] [image: Yahoo! Groups]<http://groups.yahoo.com/;_ylc=X3oDMTJkdHR0aHNoBF9TAzk3NDc2NTkwBGdycElkAzExMTIwMjMEZ3Jwc3BJZAMxNzA1Njc2OTY0BHNlYwNmdHIEc2xrA2dmcARzdGltZQMxMjY1MzYzNTcy> Switch to: Text-Only<[email protected]?subject=change+delivery+format:+Traditional>, Daily Digest<[email protected]?subject=email+delivery:+Digest>• Unsubscribe <[email protected]?subject=unsubscribe> • Terms of Use <http://docs.yahoo.com/info/terms/> . __,_._,___ -- Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more.
