Economic Recovery Measures
Yesterday CRFB released a year-end review of the Troubled Asset Relief Program (TARP). Created on the heels of the financial crisis, TARP gave the Treasury the broad authority to spend up to $700 billion to promote financial market stability. CRFB has been tracking this spending on Stimulus.org, which is a detailed database of government actions taken to deal with the U.S. financial and economic crisis, including TARP.
In his speech today, President Obama proposed reducing the amount of money available in the TARP fund to pay for the new stimulus measure. When TARP was created, Congress authorized the Treasury to use up to $700 billion for purchasing troubled financial assets. Currently, about $300 billion remains available, and so policymakers could technically rescind part of that money to pay for new stimulus costs.
How and when the Fed will unwind the massive amounts of liquidity it has provided to shore up the financial system and economy? Will the Fed be able to manage the unprecedented unwinding skillfully so that they successfully manage to steer a course between overtightening (which could slow growth) and undertightening (which could fuel inflation)?
To answer these questions, the latest term of art to be added to our financial crisis lexicon is: “triparty reverse repo operations”.
Today, in a speech at the Brookings Institution, President Obama outlined a strategy designed to accelerate job growth. In particular, he outlined four broad steps which he argued should be taken:
On Friday evening, the FDIC reported that it has taken over an additional six banks (Greater Atlantic Bank, Benchmark Bank, AmTrust Bank, The Tattnall Bank, First Security National Bank, The Buckhead Community Bank) for a cost to the FDIC of around $2.4 billion. This brings the total number of failed banks in 2009 to 130.
Here are the highlights from this weekend’s editorials on fiscal and budget policy:
A number of very interesting and relevant government reports have come out this week. Check them out:
Secretary Geithner recently said that the Administration will outline its exit strategy for TARP in the next few weeks, but the expiration date has still not been set. He recently stated that they were “close to the point where we can wind down this program and stop making new commitments,” but that they were “not quite there yet.”
The Congressional Budget Office has come out with a report estimating the impact of the American Recovery and Reinvestment Act on employment and economic output. The report estimated the federal stimulus package, in the third quarter, raised GDP by somewhere between 1.2 and 3.2 percentage points higher