Neil Barofsky, the US Treasury’s special inspector general for the bailout, says the Troubled Asset Relief Programme, or TARP, was crucial in rescuing the economy - but had costs other than in money terms. The process itself cost a ton of cash, struck at the integrity of the overall financial system and harmed public respect for the government. The report is out today (Wednesday). In words not usually seen in financial reports, it reads: “Treasury's actions in this regard have contributed to damage the credibility of the programme 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”. Suspicions grew when TARP did not require banks to report on how they used the rescue money. In addition, there were those “less-than-accurate” (lies, damn lies, statistics?) statements about the very banks that got those transfusions. Barofsky’s assessment comes as the Obama administration is trying to wind down and refocus TARP. Obama now plans an effort aimed at vulnerable community banks to get them issuing loans again. Liberals insist the programme should focus on small businesses and homeowners, while conservatives say it was an unnecessary intrusion into the financial sector and should end swiftly. Read more: AP
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