Neil Barofsky, special inspector for the program, said aspects of the financial system are more stable than in fall 2008.
(Mandel Ngan/AFP/Getty Images)
TARP may cost less than predicted
Neil Barofsky, special inspector for the program, said aspects of the financial system are more stable than in fall 2008.
(Mandel Ngan/AFP/Getty Images)
WASHINGTON - The Troubled Asset Relief Program to rescue the financial system probably will cost taxpayers much less than predicted, according to a watchdog monitoring the $700 billion effort.
“There are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008,’’ a report from TARP’s special inspector general, Neil Barofsky, said. “It now appears that the ultimate cost of TARP to the American taxpayer, while still substantial, might be significantly less than initially estimated.’’
While the audit is welcome news for taxpayers, it also says the program has shortcomings. There has been “little fundamental change’’ in executive compensation at companies that benefited from TARP, according to the report. Because of the subsidies, some of the biggest banks are “even larger,’’ and government help for the housing market risks “re-inflating that bubble’’ that was at the heart of the financial market collapse.
“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,’’ the report said.
The next phase of TARP will focus on foreclosure mitigation, small-business lending, and support for asset-backed securities markets, the report said.
Treasury Secretary Timothy F. Geithner has extended TARP until Oct. 3.
© Copyright 2010 Globe Newspaper Company.
