Dividing the TARP pie into too many pieces

Former president Bill Clinton wants some of the government's TARP money put toward "green" businesses. According to the Financial Times, "Before the banking crisis you could get banks to loan money [for green construction projects]," Mr Clinton said. That's not so easy now.

There may be some truth to Clinton's concern that money for "green" companies is limited. But the larger question for Congress and the Treasury is whether there is enough TARP money to go around. The $350 billion still left in the current fund seems like a lot of cash, but that's only true if it is not divided among too many industries.

The first pressure on TARP funds is almost certainly the ongoing recapitalization of the banking system. If the International Monetary Fund's numbers are right, the total amount of losses that the credit crisis causes will add up to almost $2 billion. By its reckoning, only about 50% of those losses have gone through the system. Red ink at banks could be worse in 2009 than it was last year.

The car companies will be asking for more money this week. The current estimate is that they will need a total of $34 billion to restructure. That includes capital that they have already been given. The head of Moody's research arm puts the total cost of saving The Big Three at $75 billion or more. That is 25% of the total money left in the TARP pool.

If Clinton and a number of others get their ways, TARP money will go to several industries. Congress had better get ready. A new TARP funded with several hundred billion more dollars will almost certainly be needed.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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