Congressional Oversight Panel Releases Final Report on the Troubled Asset Relief Program

Sen. Ted Kaufman Introduces COP’s March Report


Congressional Oversight Panel Releases Final Report on the Troubled Asset Relief Program

TARP Provided Critical Support but Distorted Markets and Created Public Stigma

WASHINGTON, D.C. – The Congressional Oversight Panel, which was established by Congress in late 2008 to oversee the $700 billion Troubled Asset Relief Program (TARP), today released its 30th and final oversight report. The report describes the financial crisis, summarizes and updates the Panel’s prior oversight reports, and evaluates federal financial stabilization initiatives.

Federal Reserve Chairman Ben Bernanke has said that, when the TARP was created in late 2008, the nation was on course for “a cataclysm that could have rivaled or surpassed the Great Depression.” It is now clear that, although America has endured a wrenching recession, it has not experienced a second Great Depression. The TARP does not deserve full credit for this outcome, but it provided critical support to markets at a moment of profound uncertainty. Even so, the program leaves behind a troublesome legacy: continuing distortions in the market, public anger toward policymakers, and a lack of full transparency and accountability.

The TARP’s estimated cost has fallen, but costs alone do not account for the program’s risks and shortcomings. The Congressional Budget Office (CBO) today estimates that the TARP will cost taxpayers $25 billion – an enormous sum, but vastly less than the $356 billion that CBO initially estimated. However, not all of the reasons for the TARP’s falling costs are encouraging. For example, Treasury’s foreclosure prevention programs, which could have cost $50 billion, have largely failed to get off the ground. Non-TARP government programs have shifted some of the costs of the financial rescue away from the TARP’s balance sheet. Further, accounting for the TARP from today’s vantage point – when the financial system has made great strides toward recovery – obscures the risk to taxpayers that existed in the depths of the financial crisis.

The TARP distorted markets by exacerbating “too big to fail” and magnifying moral hazard. In light of the TARP’s rescue of America’s largest financial institutions, it is not surprising that markets have assumed that “too big to fail” banks are safer than their “small enough to fail” counterparts. As a result, small banks continue to pay more to borrow than very large banks – an ongoing distortion in the marketplace. By protecting very large banks from insolvency and collapse, the TARP also created moral hazard: Very large financial institutions may decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss. In addition, the TARP’s rescue of domestic automotive manufacturers may appear to have extended the “too big to fail” guarantee to any company large enough to cause severe economic disruption if it collapsed.

The public backlash against the TARP has created stigma and constrained Treasury’s options. Because the TARP was designed for an inherently unpopular purpose – rescuing Wall Street banks from the consequences of their own actions – stigmatization was likely inevitable. Treasury’s implementation has, however, made this stigma worse. For example, many senior managers of TARP-recipient banks maintained their jobs and their high salaries, and although shareholders suffered dilution of their stock, they were not wiped out. To the public, this may appear to be evidence that Wall Street banks and bankers can retain their profits in boom years but shift their losses to taxpayers during a bust.

A lack of transparency and clear goals for the TARP has rendered the public unable to hold Treasury fully accountable for its actions. In perhaps the most profound violation of transparency, Treasury decided in the TARP’s earliest days to push tens of billions of dollars out the door to very large financial institutions without requiring banks to reveal how the money was used. As a result, the public will never know to what purpose its money was put. A related problem is Treasury’s failure to articulate or update clear goals for many of its TARP programs. For example, the Home Affordable Modification Program – which was originally intended to prevent 3 to 4 million foreclosures – now appears on track to help only 700,000 to 800,000 homeowners, yet Treasury has never formally announced a new target.

Full Report Below… By statute, the Panel will terminate on April 3, 2011.

The Congressional Oversight Panel was created to oversee the expenditure of the Troubled Asset Relief Program (TARP) funds authorized by Congress in the Emergency Economic Stabilization Act of 2008. The Panel members are former Senator Ted Kaufman; J. Mark McWatters; Richard H. Neiman, Superintendent of Banks for the State of New York; Damon Silvers, Policy Director and Special Counsel for the AFL-CIO; and Kenneth Troske, William B. Sturgill Professor of Economics at the University of Kentucky.

SOURCE: Congressional Oversight Panel



The Final Report of the Congressional Oversight Panel

7 Responses to “Congressional Oversight Panel Releases Final Report on the Troubled Asset Relief Program”
  1. Jumping over this…I really don’t care to hear what he has to say….I am sick of and done on the speeches. But I am still burning about the AG’s report…sitting with the bank regulators….how guttsy is that. Not talking of the frauds…but to set new rules for the future…Frig the future…it’s the past that did the harm…..settlement??? Was anyone asked if they approved of the settlement? That was not what we asked them to do…and those AG’s knew of the crimes and did nothing??? Another failed deal…and as I sizzle with that in mind…the other side of my brain leaps to ” Shock and Awe “…….They are trying so hard to ignore the frauds and no one is falling for it…it is all a scam. A mod would be a new loan…with no fraud and a new Note and Mortgage. A complete cover-up of all the frauds. The banks cannot go back and correct millions of different frauds…the fraud is already done…so after all these years NOW they come up with this mod crap…to void out the frauds on the old loan. BUT…if that bank does not own that mortgage…a new loan would be fraud. And no one will trust a note without it being examined to be true…..only a sucker would trust it…. So….Shock and Awe…go shock Obama and the banks and watch their jaw drop in awe.

    • l vent says:

      The AG’s sitting with the banks is I think, very deceptive. We must remember everything is the opposite of what we “think”. The banks indeed perped the crimes but, they are NOT who are forcing the fraudclosures. The shadow Government is pushing the AG’s to try and save the fraudsters and the U.N. is hiding behind the scenes trying to do dirty deeds. Not saying the banks are the good guys here, they did set us up and rob us but they are not the ‘entity’ pushing the fraudclosures I do not believe. I believe the opposite of that. I think the banksters are blatantly committing fraud because they know they screwed up and want to be stopped, the Shadow won’t let them stop the fraudclosures. I found an interesting you tube video last night. go to you tube and search for Obama Named Leader Of The New World Order By The Bilderbergs According To Jack Van Impe. Why those dirty sneaks.! America will not be upsurped by the U.N. This is our Country. NO ONE should vote in 2012. The New World Order is trying to steal our Constituion, our Bill of Rights and our guns. We The People OWE NO ALLEGIANCE to the U.N. or the NEW WORLD ORDER. America and its people will remain a SOVEREIGN NATION, ONE NATION UNDER GOD. We will not allow TREASONISTS TO STEAL OUR FREEDOM AND OUR COUNTRY UNDER THE GUISE OF ANY CATASTROPHE. THEY ARE ALL LIARS AND THIEVES. THIS IS OUR COUNTRY AND THESE ARE OUR HOMES AND THEY CAN’T HAVE EITHER.

      • werewolf says:

        @ l vent “NO ONE should vote in 2012. ”

        I call this a ‘poison pill’ protest.

        If you don’t like major party candidates, but want to make a difference, forget about two parties and vote for the strongest third party candidate.

        And I’m not thinking the Koch Brothers Tea Party; watch as the governors slash wages and the workers while protecting and expanding tax cuts and ‘entitlements’ for corporate and elite cronies.

        “Democraps, Repugnantcan’ts, Liberal, Conservative, Left, Right; are just labels The Powers That Be use to distract and keep us divided, preventing us from uniting against THEM.” ~Bohemianjack, on the corrupt two party political system

  2. I usually hear this guy talking good points but in this video its all bull

  3. Katheryn says:

    This total complete bull shit speech provides two purposes:

    1. They arre concerned that the “natives” are getting restless.

    2. Damage Control for tax paying citizens just waking up to the lies and deceit

    Solution: Undo by getting the press to show the total lies point by point of his speech.

    It’s just hard for me to wrap my head around the fact that someone of his stature can so calmy and collectively, but, hopefully not convincingly, get up and spew such blatant lies that can easily be shown as such. I keep saying….Twlight Zone.

  4. l vent says:

    I could not watch the thing after 2 minutes. It is just more commie propaganda being hurled at us like vomit from something possessed by a demon. I was just waiting for his head to start spinning. . Creepy,scary how convincing he tries to make himself sound. Seriously, do they really think we would believe any of this shit? They are all in legion with satan.They wanted to save us from a depression my rear end. That is exactly what the U.N./ New World Order wants, then it will be their end game, their final solution. All they did was pass the hot potato around and try to patch up some of the holes in the pirate ship. They are all up to NO good.

  5. losing my home in florida says:

    hmmmmm you decide

Leave a Reply