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You can’t cover a SarBox with a TARP November 26, 2008

Posted by Brian Schar in General.
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I had a thought this morning with regard to the secrecy with which the Federal Reserve has helicopter-dropped money fresh off the printing press to a variety of publicly-traded companies, and the additional secrecy about the collateral given by those companies to the Fed.  I would think a recipient of such funds would be required to file an 8-K, at a minimum, in order to comply with securities laws.  Further, the receipt of funds from and transfer of collateral to the Fed would have to be accounted for and audited in some manner, and such accounting and auditing is not possible in an environment of secrecy.  I wouldn’t want to be a lawyer at one of the companies accepting funds under the TARP – the compliance risks are enormous.  If one of the recipient companies goes belly up anyway, I predict Enron-like outcry and Enron-like prosecutions of the CEO, CFO and GC – the three people who roll over or go to jail.

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