The Congressional Oversight Panel created by the TARP legislation issued a report on Tuesday outlining the current crisis and possible ways ahead. The report concludes that the only ways out of the crisis are: liquidation, selling off the assets of the banks; receivership, taking control of said institutions; or “subsidization,” simply keeping the bankrupt companies afloat by giving them cash.
Of course, we’re only talking about five or ten companies here. The fact is, however, they are huge companies with massive liabilities: Citigroup, JP Morgan Chase, Wells Fargo, Bank of America, and perhaps a few other financial institutions.
While not coming out and saying it — these companies are insolvent — the implications are clear. The report also concludes that taxpayers overpaid for assets by about 50% when the initial crisis took place and the equity swaps were made by Paulson’s Treasury.