TARP Was Even Worse Than You Think: “An Abysmal Failure,” Barofsky Says


Over at The Daily Ticker, Aaron Task summarizes his interview with Neil Barofsky:

Congress never would’ve passed TARP if not for programs included in the program to help homeowners facing foreclosure and generally spur bank lending. “TARP was an abysmal failure on those very important goals the reason why they got that money to give to the banks in the first place,” Barofsky says.

TARP “did help prevent financial Armageddon,” he concedes. “But there’s a reason why Congress required and Treasury promised TARP would do a lot more. It’s not complicated to take hundreds of billions [of dollars] and pour them into institutions … and they don’t fail. You really can’t evaluate TARP” exclusively on how it impacted the banks.

Similarly, Barofsky takes offense to Treasury’s repeated proclamations that TARP has been profitable.

While the big banks have paid back their loans, the overall program is now projected to lose somewhere between $32 billion to $70 billion, with $109.1 billion owed as of June 30, according to SIGTARP. Most of those losses are tied to AIG — Treasury still own 61% of the company — but more than half of the 325 banks that received TARP aid have missed dividend or interest payments.

“The bottom line is [the government] still expects tens of millions of losses on TARP,” Barofsky says. “The losses are a lot less than originally anticipated but this resorting to trickery really shows you they’re trying to cover up how badly TARP has failed in its other goals of helping homeowners and increasing lending to the economy.”

About these ads

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s