How TARP Failed

by Ryan on January 31, 2010

in Economy

No one liked TARP (the Troubled Asset Relief Program from the Fall of 2008), but so many have credited it with averting a more massive economic collapse in the Fall and Winter between Dubya and the Obama Nation.  Well, the Special Inspector General of the TARP Program, Neil Barofsky, has a few things to say about the legacy of TARP:  we spent $700 billion bailing out an industry which is basically still behaving badly.

According to Barofsky, TARP did stabilize the financial situation and as such the taxpayer may see more of a return on our $700 billion investment down the road than we thought.  I still don’t like it, but I’ll take that analysis.  However, neither Congress or the President has done anything to prevent another potential collapse from taking place sometime in the future — reform safeguards against reckless derivative trading, shady lending practices, and unchecked government dictates do not exist at this moment, and unfortunately the market has assumed that any future problems will be bailed out!

It’s a terrible combination that won’t end well since we’re already on a path of massive unsustainable debt.  While the cash flow may have temporarily stopped the bleeding, we’ve done nothing to prevent another looming crisis.  In essence, we may have spent all this money for nothing.

{ 1 comment… read it below or add one }

Dee January 31, 2010 at 11:33 am

I couldn’t agree with you more. The elimination of safeguards has, over the last 30 years cost the taxpayers billions and almost driven us into a depression…Obama must re-regulate these financial institutions or we will find ourselves baling them out again.


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