Neil Barofsky, who acted as special inspector general for the Troubled Asset Relief Program (TARP), says that the Obama administration's glowing review of the program is all wrong.
“Though there is no question that the country benefited by avoiding a meltdown of the financial system, this cannot be the only yardstick by which TARP’s legacy is measured,” Barofsky writes in The New York Times.
“The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership.”
Barofsky points out that such Main Street-oriented goals weren't mere window dressing that needed only to be taken into account.
The plan, Barofsky notes, was designed to purchase mortgages, and the infusion of billions of dollars into the nation's largest financial institutions came with the express promise that it would restore lending.
"Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit,” Barofsky says, and without a request that banks report how they used TARP funds.
“In the final analysis,” says Barofsky, “it has been Treasury’s broken promises that have turned TARP — which was instrumental in saving the financial system at a relatively modest cost to taxpayers — into a program commonly viewed as little more than a giveaway to Wall Street executives.”
The Wall Street Journal reports that The Congressional Budget Office has lowered its estimate on the cost of the Troubled Asset Relief Program from $25 billion to $19 billion, primarily from a lower assessment of losses from assistance provided to the automotive industry.
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