As Troubled Asset Relief Program ends, views mixed about outcome of program

The Troubled Asset Relief Program lived up to expectations, according to the director of the government bailout. In the final hearing on TARP before the Congressional Oversight Panel March 4, Timothy Massad, the U.S. Treasury official responsible for the program said it prevented a collapse of the financial system and will cost taxpayers less that at first suggested. However Troubled Asset Relief Program failed, in accordance with some on the panel, who pointed out that only Wall Street, not the economy as a whole, benefited from the plan. Source of article – At final hearing for TARP, critics call bailout program a failure by MoneyBlogNewz.

TARP's success, according to the Treasury

Finally, on March 4, the TARP was finally finished. About $411 billion was spent to bail out homeowners that had foreclosure risks to them, the U.S. auto industry and even the Wall Street banks. The Congressional Oversight Panel for TARP had a presentation given by Massad who’s the assistant secretary for the Treasury Department's Office of Financial Stability. He said the U.S. government had no other option but to use TARP to keep out of a depression, which worked. In Oct 2008 when the crisis was at its worst, Congress said that $700 billion might be spent on Troubled Asset Relief Program. It can have had less than that spent. The total could be $475 billion. Initially, the cost to working class individuals was projected at $341 billion, but TARP is estimated to end up costing just $25 billion. Bank of America, Goldman Sachs and Citigroup are among the big Wall Street Banks. They have paid back the bailout money already. About $277 billion in TARP money was a! lready paid back to the government.

Why critics say TARP was a dysfunction

The Congressional Oversight Panel pointed out the severely underperforming TARP-funded Home Affordable Modification Program as evidence that government bailout funds benefited Wall Street but left the rest of The United States in the lurch. The administration said 2 years back that HAMP would help many Americans. About 4 million homeowners facing foreclosure would be helped through the program. Loan modifications have only been given to about 600,000 home owners though. House Republicans try to get rid of the HAMP plan since the oversight panel said less than 800,000 foreclosures would be helped through the plan. This is something Massad warned against. Tens of thousands of homeowners would be without help in this dreary economy if the plan ends.

Is this a moral hazard?

Critics of TARP on the oversight panel contend that TARP condoned moral hazard by assuring Wall Street banks that they are indeed “too big to fail.”. The Wall Street banks know that in the future they will be bailed out. This is the reason why they’ll continue to maximize profits with unnecessary risks. The claim that Massad has that TARP was successful is something TARP critics won't believe. They say that this is since the United States economy is still really bad, the unemployment is still high and the large banks have not changed a thing. Joseph Stiglitz is a Nobel Laureate on the oversight panel. He said that Troubled Asset Relief Program was a "dismal failure" since the goal was to trigger an economic recovery.

Information from

Market Watch

marketwatch.com/story/treasury-tarp-ranks-among-best-crisis-responses-2011-03-04

ABC News

blogs.abcnews.com/thenote/2011/03/treasury-official-praises-tarp-expresses-concern-for-housing-sector.html

Reuters

reuters.com/article/2011/03/04/usa-financial-bailout-idUSN0422157520110304?pageNumber=2