Why does this picture make me feel as if Neel Kashkari plans to scoop up my taxpayer dollars and hide in a cave? Only to be sought out by a hobbit?

This is the guy who is responsible for overseeing TARP–the Troubled Assets Relief Program. The rationale was if the government bought the mortgage-backed securities, collateralized debt obligations, and other loan-based securities that have declined in value, then banks would resume lending.

But in a stunning change of heart, Paulson decided to use the money to inject capital directly into banks–in particular, by buying their stock. Which also should have had the effect of lifting stock prices.

But the one missing element was that how were we as taxpayers informed of how the lucky TARP fund recipients planning to use the money? Well…we weren’t.

And since this recession is characterized by a lack of confidence amongst lenders and investors, this switch and lack of transparency didn’t help (not to mention the three page summary Paulson gave to congress at first, and yet another “We must do this now or we’ll all die!!” line of reasoning).

Banks are afraid to lend because what if the lendee didn’t pay the loan back? Then the bank may lose capital, may not be able to make their overnight capital requirements, may not be able to get a loan from a fellow commercial bank, and as a result have to shut their doors.

And consumers are still afraid to invest because…well, would you invest in a market led by the current cast of characters? Perhaps for the long term, but if you need your money in the short term, sleeping at night would be rough if you kept your money in this stock market.

Now we’re set to give the Obama administration the remaining TARP money. This time, Obama wants to make the doling and usage of the funds transparent–even allow it all to be trackable online.

So far, Obama has proven to be effective in getting action and getting others to ask “how high?” when he says “jump”.

But will he be able to get Citigroup or JP Morgan to say specifically, for the whole public to see, how they’re using this money?

I’ll be watching how Wall St responds to Obama. So far, we like him…but will the big banks let Obama tickle the soft part of their underbellies while they wag their tails?

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