|
Bailout watchdog expects much to remain unrefunded
2009-10-21
WASHINGTON - The man who watches over the $700 billion in government money given to banks and other institutions to avert a financial collapse said Wednesday he thinks it's too early to say how much will be repaid to the taxpayers. Just as the Obama administration prepares to announce a new TARP-like program for small community banks, Inspector General Neil Barofsky said he believes that "it's unrealistic to think we're going to get all of that money back." The Treasury Department has spent more than $454 billion through TARP programs. Forty-seven recipients have paid back nearly $73 billion. That means more than $317 billion remains outstanding with the program set to expire Dec. 31. Later Wednesday, President Barack Obama is expected to announce the community bank assistance effort. The American Bankers' Association has asked for $5 billion in rescue-fund money to help small banks extend more loans. Asked on a nationally broadcast interview how he would grade the program, Barofsky said, "I think right now it would have to be an incomplete." Barofsky did say the program was successful in "pulling us back" from a financial collapse, however. At the same time, he told CBS's "The Early Show" that the resumption of huge executive bonus payments by some of the same institutions that benefited from the government bailout has sown distrust and cynicism among many taxpayers. The mixed and blunt assessment came as the Obama administration takes steps to wind down and refocus the Wall Street rescue effort. Barofsky's conclusions were in a quarterly report scheduled for release later Wednesday. An administration official said Tuesday that the bailout effort's signature initiative - a capital purchase program that aimed to inject $218 billion into banks - would effectively wrap up at the end of the year. But even as the administration aimed to refocus the massive Troubled Asset Relief Program on small businesses and homeowners, Barofsky said in his report that the effort to save the nation's financial sector came at great cost to taxpayers, to the integrity of the financial system and to the public's perception of the federal government. "Despite the aspects of TARP that could reasonably be viewed as a substantial success," he wrote, "Treasury's actions in this regard have contributed to damage the credibility of the program and of the government itself, and the anger, cynicism and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP." Barofsky said public suspicion was fed by Treasury's decision not to require banks to report how they used their rescue money and its "less-than-accurate" statements describing the financial condition of nine large banks that benefited from large infusions of aid. The TARP program began under the administration of President George W. Bush and has expanded under Obama. The administration official, speaking on the condition of anonymity because the details had not yet been made public, said the Treasury Department plans to cap two TARP programs at levels below initial projections. A program designed to rid big banks of their bad assets will spend $30 billion instead of $75 billion. Another that supports a Federal Reserve effort to ease bank credit will top off at $30 billion instead of $80 billion. A new initiative aimed at banks - the Capital Assistance Program - had no applicants and will also end, the official said. The overall TARP program has come under criticism in Congress from across the political spectrum. Liberals maintain the program needs to shift its focus from big financial firms to small businesses and homeowners. Conservatives insist the program has been an unnecessary intrusion into the financial sector and should end swiftly. In his report, Barofsky credited the Federal Reserve and the Treasury Department for adopting some of his accountability recommendations over the past several months. But he said several of his agency's proposals for greater transparency have gone unheeded. The report describes a patchwork of initiatives carried out under the TARP umbrella - some designed to assist the biggest of Wall Street institutions, others to bail out the struggling auto industry and yet others to help homeowners struggling to stave off foreclosure. Even within those programs, Barofsky found inconsistent attempts to hold recipients of the bailout accountable to taxpayers.
|  | | | Profile |
News2421 | Gallery | Links | |
| |
|
|
| 
