Congressman Grayson joins the list of Congressfolk who are demonstrating their ability to "get it" when it comes to the TARP and other associated "games" that our government has run over the past couple of years.

His latest salvo is in this missive (click to read PDF in Adobe) addressed to Neil Barofsky.  The gist of it is contained here:

Congress has very little information regarding the asset guarantee arrangements that the Federal government struck with Citigroup in November, 2008.  According to what we do know in the Section 129 report filed with the relevant Congressional committees in November, 2008, the Treasury, FDIC, and Federal Reserve entered into a ‘loss-sharing arrangement’ with Citigroup on a designated pool of $306 billion in “primarily mortgage-related assets currently held by Citigroup”.  This pool was “comprised of loans and securities backed by residential and commercial real estate, associated hedges, and such additional assets as may be agreed by Citigroup and the agencies.”

Uh huh.

Remember that ditty?  Treasury and/or The Fed "guaranteed" some $300 billion on what we think are mortgage assets of some sort.

We've never seen details on any of this.  It is yet another black hole program of The Fed and Treasury, and one that Congress has, so far, ignored.

Yet you can't ignore it.  Congressman Grayson raises the seminal questions related to this "guarantee" (or "loss sharing" if you wish), including:

• How was this deal negotiated, and why is it in the best interest of the taxpayer for it to exist at all?
• What are the current marks?
• Are these assets performing?  Where's the cash flow?

And, the money shot...

• Who should be held accountable for the reckless acquisition of a third of a trillion dollars in assets that ended up requiring a government guarantee?

BINGO.

Specifically, as I have repeatedly pointed out, where in the hell were the regulators all these years when this $300+ billion in "assets" was acquired?  How did Citibank wind up with this garbage on its balance sheet without regulators stepping in to put a stop to it?  Who is responsible for what appears to be the wanton and intentional blindness that would be necessary for a firm to manage to "acquire" this sort of book of assets that would require a government bailout - that is, a set of assets that were at risk of loss sufficient to sink one of the largest financial firms and depository banks in the United States.

These questions should have been asked months ago before any of these "bailouts" happened.  Quite frankly, I think there should be a special prosecutor appointed - or a whole bunch of them - to look into all of the circumstances surrounding this entire mess.

This isn't "bad luck" folks, especially when you consider that this is not limited to Citibank.  It also includes similar or identical practices at Downey, First Federal, IndyMac, Washington Mutual and Wachovia, along with many others, and all of these firms claimed their loans were performing "just fine" not long before they blew up.

In point of fact we know that OTS was complicit in backdating deposit activity as was reported by Bloomberg, an act of clear accounting fraud.

Yet there have been no charges laid as of yet.

Why not?

Why should the taxpayer take the risk of this loss?  Why not shove it where it belongs - on the bondholders of Citibank?  Protect the depositors, break the bank up, sell off the deposits and let the carcass die.

If Congressman Grayson's letter, along with Congressman Issa's inquiry into the Bank of America/Merrill merger is the start of real investigation and reform, it will mark the first real "green shoot" I've seen thus far in this mess.

Let's hope there are many more green shoots, and that a prosecutor is soon appointed to convene a Grand Jury.

Americans deserve nothing less.