WASHINGTON – March 21, 2011 – The federal bailout of the U.S. financial system, which was originally forecast to cost as much as $700 billion, is expected to cost far less than expected, according to a newly released congressional report.
The federal bailout, known as the Troubled Asset Relief Program (TARP), was launched by the Bush administration in response to the 2008 financial crisis and was to include aid to struggling homeowners. But TARP is expected to now cost taxpayers about $25 billion because it did not accomplish all that was envisioned to help homeowners avoid foreclosure, a congressional panel said.
TARP “provided critical support to markets at a moment of profound uncertainty,” the panel said, crediting it for helping restructure insurer American International Group Inc. (AIG) and aiding troubled automakers.
But the congressional panel faulted TARP for failing to spend enough money to curb more foreclosures.
“One of my major concerns is that there was a heck of a lot more attention paid to Wall Street than there was to Main Street,” says Sen. Ted Kaufman, chair of the Congressional Oversight Panel, which was created to oversee the management of TARP.
The Treasury Department allocated $45.6 billion for three major housing programs to help homeowners, including the Home Affordable Modification Program (or HAMP), a refinancing program run by the Federal Housing Administration to aid underwater homeowners, and a program designed to help hard-hit areas. But the Treasury Department only spent about $1 billion in TARP money for the foreclosure prevention effort, the panel noted.
The newly released report coincides with the House getting ready to vote to end HAMP as well as three other foreclosure prevention programs. The GOP-led efforts have pressed forward, despite White House threats that it will veto any efforts to end any of its foreclosure aid programs.
Meanwhile, a top senator on Thursday told Reuters News that the Senate Banking Committee would step up oversight of the TARP bank bailout program.
“We will push for tough oversight, so we can better protect consumers, investors and taxpayers,” says Tim Johnson, committee chairman. One of TARP’s former watchdogs, the Congressional Oversight Panel, will end its oversight, as originally planned, in April.
Source: “TARP’s lower cost reflects troubles of foreclosure effort,” Dow Jones Business News (March 16, 2011) and “U.S. Senate panel to step up TARP oversight-chairman,” Reuters News (March 17, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
The federal bailout, known as the Troubled Asset Relief Program (TARP), was launched by the Bush administration in response to the 2008 financial crisis and was to include aid to struggling homeowners. But TARP is expected to now cost taxpayers about $25 billion because it did not accomplish all that was envisioned to help homeowners avoid foreclosure, a congressional panel said.
TARP “provided critical support to markets at a moment of profound uncertainty,” the panel said, crediting it for helping restructure insurer American International Group Inc. (AIG) and aiding troubled automakers.
But the congressional panel faulted TARP for failing to spend enough money to curb more foreclosures.
“One of my major concerns is that there was a heck of a lot more attention paid to Wall Street than there was to Main Street,” says Sen. Ted Kaufman, chair of the Congressional Oversight Panel, which was created to oversee the management of TARP.
The Treasury Department allocated $45.6 billion for three major housing programs to help homeowners, including the Home Affordable Modification Program (or HAMP), a refinancing program run by the Federal Housing Administration to aid underwater homeowners, and a program designed to help hard-hit areas. But the Treasury Department only spent about $1 billion in TARP money for the foreclosure prevention effort, the panel noted.
The newly released report coincides with the House getting ready to vote to end HAMP as well as three other foreclosure prevention programs. The GOP-led efforts have pressed forward, despite White House threats that it will veto any efforts to end any of its foreclosure aid programs.
Meanwhile, a top senator on Thursday told Reuters News that the Senate Banking Committee would step up oversight of the TARP bank bailout program.
“We will push for tough oversight, so we can better protect consumers, investors and taxpayers,” says Tim Johnson, committee chairman. One of TARP’s former watchdogs, the Congressional Oversight Panel, will end its oversight, as originally planned, in April.
Source: “TARP’s lower cost reflects troubles of foreclosure effort,” Dow Jones Business News (March 16, 2011) and “U.S. Senate panel to step up TARP oversight-chairman,” Reuters News (March 17, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
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