TARP Inspector Says Rescue to Cost Taxpayers Less Than Expected

[ProSense]

TARP Inspector Says Rescue to Cost Taxpayers Less Than Expected

By Brendan Murray

Jan. 31 (Bloomberg) -- The U.S. government’s Troubled Asset Relief Program to rescue the financial system probably will cost taxpayers much less than first predicted, according to a watchdog monitoring the $700 billion effort.

“There are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008,” a report from TARP Special Inspector General Neil Barofsky to Congress said yesterday. “It now appears that the ultimate cost of TARP to the American taxpayer, while still substantial, might be significantly less than initially estimated.”

<...>

“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” the report said.

<...>

Barofsky has also expanded investigations into misconduct related to the financial-industry bailout, including insider trading, accounting violations, mortgage fraud, public corruption and money laundering.

more

[girl gone mad]

1. Banks have been eager to exit TARP since Geithner and co. have found new,

no-strings-attached ways to funnel hundreds of billions into their coffers. And the banks still aren't lending, as bailout critics predicted from day one.

[Oregone]

2. Maybe, but if he is correct about the potential crisis being larger now, its may cost far more later

[ProSense]

3. Barofsky is obviously,

like Volcker, advocating the need for strong financial reform.

Volcker sees markets more fragile without reforms

WASHINGTON (Reuters) - Failure to enact financial reforms to curb large banks' risky activities and allow them to fail without broad market disruptions will make the financial system even more fragile in the future, Obama administration adviser Paul Volcker said on Sunday.

In an opinion piece written for The New York Times, Volcker, a former Federal Reserve chairman, said the United States needs better protection against "outliers" -- a limited number of mega-institutions whose failure would be "disturbing" to markets.

"The implication is clear. We need to face up to needed structural changes, and place them into law," Volcker wrote. "To do less will simply mean ultimate failure -- failure to accept responsibility for learning from the lessons of the past and anticipating the needs of the future."

<...>

In the most recent crisis, bailout efforts that saved several large institutions from collapse left a "residue of moral hazard," Volcker wrote, implying that "really large, complex and highly interconnected financial institutions can count on public support at critical times."

more

[Oregone]

4. Uh. sure, and I like throwing pennies into wishing wells

Id be surprised if the necessary reforms really happen. And if not, those TARP funds just aided quite a bit of consolidation that may come out to bite us in the ass in a very bad way (as he mentions in that article). Next time, there is a whole lot more strings they oughta attach before throwing money at a problem.