Final Cost Of TARP Was Miniscule, Boasts Geithner

Treasury Secretary Tim Geithner told a congressional oversight panel on Thursday that the economic rescue program passed during the Bush administration helped stave off a depression and ended up costing the government relatively little.

According to Geithner, the Troubled Assets Relief Program “brought stability to the financial system and the economy at a fraction of the expected costs.”

“In terms of direct financial cost, TARP will rank as one of the most effective crisis response programs ever implemented,” he added.

In prepared remarks, Geithner told the panel that TARP, which officially expired in October, cost taxpayers roughly $25 billion, according to a recent estimate put forth by the nonpartisan Congressional Budget Office. Forecasters initially predicted that the total cost of the bailout would ultimately reach upwards of $350 billion.

Geithner, however, was quick to remind that while the program helped to some extent, credit is still hard to come by for some, and the housing market remains subpar.

“We are still living with the scars of this crisis, and both our financial system and the economy as a whole continue to show signs of significant damage.”

To counter the continued need of businesses and families for financial assistance, Geithner said the government is using other avenues to provide help.

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Geithner Thanks TARP For Record-Low Interest Rates

by Miles Wolf Tamboli
Talk Radio News Service

Treasury Secretary Tim Geithner said Tuesday that due, in part, to the Troubled Asset Relief Program (TARP), credit costs have plummeted, creating new opportunities for homeowners and small businesses.

"The financial system is in a much stronger position, and because of that, the cost of credit for homeowners, for consumers, for businesses has fallen significantly," Geithner said. "Rates for mortgages and auto loans, for example, are at historic lows."

Congressional Oversight Committee Chair Elizabeth Warren pressured Geithner to provide a "metric" for TARP's success in protecting American citizens from the mortgage crisis.

"You set aside $50 billion, and what do you have to show for it? What is the metric for success here," she questioned. "Is it 120,000 families saved over fifteen months, at a time when 186,000 are posted for new defaults and foreclosures every month? Is that a successful program? How do we decide when the program is working?"

Despite reassurances from the Treasury Secretary, lawmakers were left wondering in what ways to measure the success of Tarp before the program's expected termination in October.

"This hearing should be a eulogy for TARP. We are working very hard to put this program to rest," Geithner said. "It's not going to solve all the problems facing the country, it wasn't designed to, but it's done the essential thing it was designed to do and, therefore, our expectation is that it will be allowed to expire."

The Treasury Secretary also used the hearing as an opportunity to show his support for financial reform, which he sees as a chance to shift focus from crisis response to crisis prevention.

"The House and the Senate are now very close to enacting the strongest set of reforms we've considered as a country since the Great Depression," said Geithner. "The reforms will end 'Too Big To Fail' [and] non-bank financial firms, such as AIG, will no longer be allowed to exploit regulatory cracks."

Geithner said that the best thing Congress can do to tackle the remaining credit problems facing America is to pass the set of credit programs that benefit small businesses.

Treasury Should Mandate Mortgage Modifications, Says TARP Watchdog

The man in charge of monitoring the Troubled Assets Relief Program (TARP) told members of the Senate Finance Committee Tuesday that the Obama administration should consider forcing lenders to reduce payments for homeowners behind on their mortgages.

Neil Barofsky, the Special Inspector General of TARP, a $700 billion financial rescue program designed to help cushion the blow of the recent housing collapse, said that foreclosures have increased since the current administration announced measures last year to straighten out the housing market.

According to Barofsky, the Treasury Department's Home Affordable Modification Program (HAMP), a voluntary $75 billion foreclosure-prevention policy which gives payments to lenders who agree to reduce the principal on homeowners' loans, “has made very little progress in stemming this onslaught."

In a report put out Tuesday morning, Barofsky wrote that the Treasury Department could do more for borrowers by making the program mandatory.

"Giving servicers the discretion to implement principal reduction introduces a questionable inconsistency into the HAMP program and stands in stark contrast to the mandatory nature of the other significant mortgage modification triggers."

Proposed Financial Regulatory Agency Will Protect Consumers, Claims Treasury Official

Leah Valencia, University of New Mexico-Talk Radio News Service

U.S. Treasury Department Director for Consumer Protection Peggy Twohig said that establishing a far reaching financial regulatory agency could create a system of checks and balances for financial institutions, thus ensuring the strength of the U.S. economy.

“An agency would create uniform protection for consumers and make a level playing field for all types of financial services,” she said.

While discussing the Obama administration’s proposed Consumer Financial Protection Agency at the New American Foundation Friday, Twohig said it is necessary for all financial institutions to learn a sense of responsibility for the consumer by following base regulations

“The administration has supported that,” she said. “Part of the legislative proposal is for federal rules to be a floor not a ceiling that would apply to everyone.”

Twohig said there was not acceptable oversight of banking sectors in the past, adding that this caused a race to the bottom, where nonbank lenders offering aggressive products often steered consumers to unacceptable loans. As a result, banks who wanted to compete felt pressured and began to loan irresponsibly. Twohig said the proposed agency will prevent such an occurrence in the future.

“We need basic standards that will protect all consumers,” she said. “This will help the responsible players... who want to offer straightforward transparent products for consumers.”

Has the Eye of the Economic Storm Passed?

By Courtney Ann Jackson-Talk Radio News Service

“The force of the economic storm is weakening a bit,” said U.S. Treasury Secretary Timothy Geithner yesterday. Geithner discussed proposed Fiscal Year 2010 budget for the Treasury Department and the Internal Revenue Service with members of the Senate Appropriations subcommittee.

“We’re working to repair and reform our financial system so that it works for, not against, recovery. We’re working to restore growth and meet our fiscal goals by redesigning our tax code, bolstering enforcement,” said Geithner. “We’re working to advance our interest globally, working with other countries to promote economic recovery and financial repair and to ensure more open markets for U.S. businesses.”

Geithner and the Treasury Department are seeking increases in multiple areas including an increase that will bolster the staffs of the U.S. domestic finance and tax policy offices. Other increases will contribute to community development institutions and IRS enforcement efforts. Geithner also said the increase in the budget proposal will allow the U.S. to “meet international obligations and to help us craft a global response to the crisis in this more integrated global economic system we live in today.”