Monday, January 31, 2011
Can you TARP this?
You will probably need an extra $200 Billion on top of the original TARP amount if you want to fund a TARP program for the Kabul Bank. That is the current expected amount of the loss of the largest bank in Afghanistan due to fraud.
Fraud and mismanagement at Afghanistan’s largest bank have resulted in potential losses of as much as $900 million — three times previous estimates — heightening concerns that the bank could collapse and trigger a broad financial panic in Afghanistan, according to American, European and Afghan officials.To put it in perspective, $900 Billion is 30 times the 2010 Gross Domestic Product of the entire goddamned shithole of a country. $900 Billion is one hell of a haul. One can only imagine the quiet admiration of Blankfein, Dimon et. al. for the perps.
The extent of these losses make it clear that keeping the bank afloat — something the government has said it is determined to do — would require large infusions of cash from an already strained budget.
Banking specialists, businessmen and government officials now fear that word of Kabul Bank’s troubles could prompt a run on solvent banks, destroying the country’s nascent banking system and shaking the confidence of Western donors already questioning the level of their commitment to Afghanistan.
The scandal has severe political and security implications. Investigators and Afghan businessmen believe that much of the money has gone into the pockets of a small group of privileged and politically connected Afghans, preventing earlier scrutiny of the bank’s dealings.
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