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Watchdog Panel: TARP Did/Didn’t Work

From a suddenly trusting Associated Press:

TARP special inspector general Neil Barofsky

Bailout watchdog: Crisis response worked, somewhat

By Daniel Wagner, AP Business Writer

December 9

WASHINGTON – The government’s $700 billion bailout of the financial system helped prevent an all-out panic last fall but hasn’t met many of the targets Congress set out, a watchdog panel says.

"Congress set goals for (the bailouts) that went well beyond short-term financial stability, and by that measure problems remain," said panel chair and Harvard Law school professor Elizabeth Warren.

The programs funded by the bailout — including bank capital injections, foreclosure relief and automaker rescues — were uneven in their success, the panel says. But it also noted that there is broad consensus that the programs helped avert a possible economic calamity.

The findings are part of a sweeping review of a year’s work by the panel Congress created to oversee the Troubled Asset Relief Program, or TARP. It discusses the relative strengths of the diverse programs funded by TARP and evaluates them against standards Congress set.

The Treasury Department said in a statement that "by every measure, TARP has succeeded in achieving its primary goal of economic stabilization."

"Confidence in our financial system has improved, access to credit is increasing, and the economy is growing. The government is exiting from its emergency financial policies and taxpayers are being repaid," Treasury said. "Indeed, the ultimate cost of those policies is likely to be significantly lower than previously expected."

But the panel’s report points to ongoing problems in the financial system as evidence that the bailouts did not address every concern Congress laid out. Among the problems: Limited credit, ongoing bank failures, continued weakness at some large banks, escalating job losses and foreclosures and the banking system’s continued reliance on government support

Responding to the panel’s report, the Treasury Department agreed that unemployment and foreclosure rates remain high, while access to credit for small businesses is limited

Texas Rep. Jeb Hensarling, the only Republican on the panel, voted not to approve its report. In separate comments, he wrote that TARP bailed out failing and non-financial firms, was unsuccessful in stemming the foreclosure crisis and politicized decisions that should have been purely economic.

"TARP is failing its mandate," Hensarling wrote. "It is difficult to conclude that Treasury has diligently discharged its taxpayer protection obligation." …

There is no more proof that it helped the financial system to recover than there is proof that the stimulus saved and created 1.6 million jobs.

The programs funded by the bailout — including bank capital injections, foreclosure relief and automaker rescues — were uneven in their success, the panel says.

If by “uneven in their success,” the panel means “unmitigated failures,” we would agree.

We don’t see much evidence that the TARP program did anything but help Mr. Obama’s ACORN and union constituents.

But it also noted that there is broad consensus that the programs helped avert a possible economic calamity.

This must be the same "broad consensus" that we have on man-made global warming.

The Treasury Department said in a statement that “by every measure, TARP has succeeded in achieving its primary goal of economic stabilization…. Confidence in our financial system has improved, access to credit is increasing, and the economy is growing…”

We seem to recall that the big fear at the time TARP was rushed through was that unless something was done immediately credit would be hard to get.

The last we heard, credit is still hard to get.The economy is only growing because of government spending.

Moreover, there is no evidence that the financial system is any more stable than it would have been without government intervention. Just as there is no evidence that the automakers are any better off than they would have been without a bailout.

There is, however, an abundance of evidence that the economy is suffering and will continue to suffer because of the federal government sucking so much capital out of the private sector.

[T]he panel’s report points to ongoing problems in the financial system as evidence that the bailouts did not address every concern Congress laid out. Among the problems: Limited credit, ongoing bank failures, continued weakness at some large banks, escalating job losses and foreclosures and the banking system’s continued reliance on government support.

Okay, “the bailouts did not address every concern.”

So which specific concerns did it address?

Somehow both the watchdog’s report and the AP article neglect to name a single one.

This article was posted by Steve on Wednesday, December 9th, 2009. Comments are currently closed.

2 Responses to “Watchdog Panel: TARP Did/Didn’t Work”

  1. proreason says:

    I would say the TARP worked 1000%.

    Obamy got elected, didn’t he?


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