Watchdog: TARP Profit Is 'Misconception'
Hundreds of small banks struggling to repay loans
By John Johnson, Newser Staff
Posted Apr 25, 2012 1:05 PM CDT
More than 300 small banks in the US are struggling to repay their TARP loans, says a watchdog.   (Shutterstock)

(Newser) – The Treasury Department tends to give glowing reviews to the TARP bailout, but the program's inspector general has a distinctly different view. "It is a widely held misconception that TARP will make a profit," writes Christy Romero in a new report to Congress, according to the Huffington Post. She notes in particular that 351 smaller banks that got loans are struggling to repay them, reports the Wall Street Journal.

"The status of those banks is one of the major issues facing TARP nearly four years after the financial crisis," says her report. What's more, Romero warns that the question of whether TARP even makes a profit is narrow-minded. TARP may indeed "have prevented the immediate collapse of our financial and auto-manufacturing industries," but "the trade-off is not without profound long-term consequences. A significant legacy of TARP is increased moral hazard and potentially disastrous consequences associated with institutions deemed 'too big to fail.'" Reform is still needed, and the nation can't let its guard down because of its improved financial picture, warns Romero.

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Comments
Showing 3 of 5 comments
crazy_baldheads
Apr 25, 2012 9:14 PM CDT
Its that damn obama and his bailout....oh wait that one IS working Quick Rammrod, how can we blame this on obama?
Spudsy
Apr 25, 2012 8:18 PM CDT
Well, since Paulson didn't rule out that the bailout could be used for bonuses, is this really a surprise? The money is safely in the bank accounts of the people that rewarded themselves for sinking the country.
InferiorToYou
Apr 25, 2012 3:55 PM CDT
Wasn't the idea behind "too big to fail" supposed to be an orderly breakup so they would no longer be too big to fail? Instead we see more consolidation, and they continue to risk FDIC insured money in derivatives and other junk markets.