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Tuesday, April 20, 2021

With Bush Administration Gone, New Investigations Pending in Washington

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For the first time in months, there was no report Thursday from Congress on the economic stimulus that President Obama helped engineer.

The absence of the results from the bipartisan House and Senate “oversight committees” was in keeping with another dispute in Washington over a highly technical program called the TARP Municipal Securities Purchase Program.

The program provides financing to public pensions, which operate in a very opaque regulatory environment.

One issue for the Treasury Department, which is charged with conducting the analysis, is determining how much of the $70 billion the administration gave to public pensions was used for this purpose, called mortgage backed securities.

Many saw it as a stimulus program, but some did not, and it ran into some pushback.

Because many states were unable to afford the mortgage bonds, with interest rates at the time still averaging over 4 percent, one state, New York, rejected some of the money and then sued, saying it was not told how to spend the money and therefore could not determine what it did use.

“He dealt with the issue at the time but the loss of that lawsuit hampered the administration in doing so,” said Todd Harrison, senior fellow in fiscal policy at the Center for Strategic and International Studies.

“He came back, but there are lot of issues beyond mortgage-backed securities. And there are a lot of these legacy issues.”

Treasury officials are instead planning to let this is up to a new committee, the TARP Oversight Committee.

The Federal Reserve, which was charged with selling off $730 billion in mortgage securities that were unsold by the Treasury Department after it purchased them for public pensions, will still analyze the findings.

The Senate last week passed a report about what it viewed as the effectiveness of the program, finding that it helped to extend the life of the public pension systems, which help maintain the nation’s retirement infrastructure, but not as much as the administration intended.

The report found that in 2012, 21 percent of the loans that Treasury invested in municipal securities before the stimulus law was enacted were eventually used for mortgage-backed securities, not of the same type as the TARP. This was the largest use of the funds.

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