Monday, February 01, 2010

SIGTARP report: housing bubble 2.0?

Last night, FT came out with this report on Sig-TARP probing possible insider trading at US banks:

"
Neil Barofsky, the special inspector-general overseeing the US government’s financial rescue efforts, is to probe allegations of insider trading among bank executives and their associates.

Eight of the largest banks in the US received between $2bn and $25bn in October 2008 under a programme to prop up the financial system led by Hank Paulson, then Treasury secretary.

Dozens more institutions followed and Mr Barofsky, who examines the troubled asset relief programme, is looking into whether information improperly made its way to trading rooms during a feverish period in which the government and banks were frequently exchanging information..."

The article goes on to say that much of the latest SIG-TARP report focuses on government's increased role in the housing market.

"Much of Sig-Tarp’s new report is given over to an examination of the housing market and the multitude of government schemes designed to support lending and help homeowners avoid foreclosure.

“The government has done more than simply support the mortgage market,” the report said. “In many ways it has become the mortgage market with the taxpayer shouldering the risk that had once been borne by the private investor.”

Mr Barofsky added: “All of the things that were broken in the housing market and the different roles that different private players have played, some of what we recognise now . . . actually contributed to the bubble and to the ensuing crisis are really being replicated by government actors.”"

The myriad government bank lending programs have become too numerous and confusing for me. I imagine that it's very easy to lose track of all this information unless you are a writer, blogger, or news junkie particularly focused on the bank bailouts and lending programs designed to prop up US housing prices.

To catch up with some of these details, we might want to turn to Dr. Housing Bubble's blog for their new post on the "Stunning STIGTARP report" and "The Subtle Nationalization of the Banks and Housing Market". I can see some interesting data and insights leafing through this post, and will now give it a careful read.