USA Today reports:
A Treasury Department watchdog is warning that a key $700 billion bailout program has damaged the government’s credibility, won’t earn taxpayers all their money back and has done little to change a culture of recklessness on Wall Street.
“The American people’s belief that the funds went into a black hole, or that there was a transfer of wealth from taxpayers to Wall Street, is one of the worst outcomes of this program, and that is the reputational damage to the government,” said Neil Barofsky, special inspector general of the Troubled Asset Relief Program (TARP), in an interview.
His 256-page report, out Wednesday, said TARP played a significant role in bringing the financial system back from the “brink of collapse” but questioned its effectiveness in increasing lending to small businesses or reducing the risk of foreclosures. Initially designed by the Treasury to buy toxic assets that threatened the financial system, TARP funds ended up invested in 685 banks, bailing out auto companies and funding a program on home mortgage modifications.
“We don’t even know where the money went,” says Rep. Daniel Lipinski, D-Ill., who recently called for TARP assistance to end in December, when it’s set to expire. The Treasury has the authority to extend the program until next October.