TARP Not Dead Yet

The top official tasked with oversight of the nearly $800 billion bank bailout program says closing the book on it now would be premature.

In a report issued to Congress today, Neil Barofsky, appointed in 2008 as the Special Inspector General of the Troubled Asset Relief Program, said TARP has not yet run its course, contrary to popular belief.

“With more than $80 billion still obligated and available for spending, it is likely that far more TARP funds will be expended after October 3, 2010, than in the year since last October when U.S. Treasury Secretary Timothy Geithner extended TARP’s authority by one year,” Barofsky wrote. “In short, it is still far too early to write TARP’s obituary.”

In his report, Barofsky offered varying conclusions as to the success of TARP, stating that it worked to prevent a nationwide depression, but failed to spur lending to “Main Street.” Barofsky also lamented the continued state of the country’s economy, pointing to high unemployment, poverty and home foreclosure rates as evidence that TARP did not meet all of its goals.

“This report calls into significant question the very credibility and competence of the Treasury Department,” responded Rep. Darrell Issa (R-Calif.), the top Republican on the House Committee on Oversight and Government Reform. “Perhaps the most disturbing finding in this report is that ‘the biggest banks are bigger than ever’ and the sentiment that the ‘larger too big to fail’ banks enjoy a significant advantage as a result of government support.”

On the bright side, Barofsky noted that the total cost of TARP to American taxpayers will likely fall in the $50-65 billion range, a substantially smaller figure than was initially forecasted. Yet, he said, the public’s attitude toward TARP has been mostly negative, due largely to mistrust over how the government has carried out the program.

“While some of that hostility may be misplaced, much of it is based on entirely legitimate concerns about the lack of transparency, program mismanagement, and flawed decision-making processes that continue to plague the program.”

According to the report, roughly $180 billion in TARP funds remain unused.