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  • TARP Inspector General: Same Road, Faster Car

    In an unusually harsh report released yesterday, the government’s Special Inspector General for TARP blasted the bailout program, charging that it has not only failed to meet its goals, but that — absent change — it may have made things worse.

    Among other things, Inspector General Neil Barofsky concluded that because of the bailouts, the market is “more convinced than ever that the Government will step in as necessary to save significantly significant institutions.” This, he says, creates a moral hazard, through what he calls a “heads I win; tails, the Government bails me out,” mentality. The recent extension of TARP for another year only reinforced that moral hazard, by “permitting Treasury to maintain a war chest of potential rescue funding…”

    The IG also expressed concern about the housing market, stating that the “Federal Government’s concerted efforts to support home prices,” in part funded by TARP, “risks re-inflating” the housing bubble.

    In other words, the report concludes: “…even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform [which the report does not define], we are still driving on the same winding mountain road, but this time in a faster car.”

    The answer, however, isn’t more regulation and protection of “too big to fail” institutions, as proposed by President Obama. Instead, policymakers should make failure a more feasible option for all institutions, reducing pressure for bailouts and forcing them to bear the cost of their own actions. In doing that, a good place to start would be a revised bankruptcy procedure.

    Mountain roads are always dangerous. But by taking dangerous cars off the road, rather than paying for their repair bills, the highway can be made safer for everyone.

    Posted in Ongoing Priorities [slideshow_deploy]

    9 Responses to TARP Inspector General: Same Road, Faster Car

    1. Pingback: TARP Inspector General Blasts TARP! « American Elephants

    2. Pingback: The Absurd Report » TARP Inspector General: Same Road, Faster Car

    3. Pingback: Rep. Clyburn: "We've Got to Spend Our Way Out of this Recession" | The Foundry: Conservative Policy News.

    4. Jason Kite, Malibu, says:

      Possible Solution:

      I charge the Speaker to propose making

      the Drinking age 16 and the Driving age 21.

      A "Drinking Stamp" may be prudent here,

      "For the stomach Sake."


      Jason Kite

    5. Jason Kite, Malibu, says:

      Amend: "Marajuana Stamp",

      No "Alcohol Stamp",

      Not "Drinking Stamp."



    6. Jason Kite, Malibu, says:

      Yes, to avoid TARP collision,

      have the Federal Government

      sell (taxed) driving stamps and

      counties pass out alcohol stamps.

      You just can't make this stuff up.


      Tu Amigo

    7. Pingback: In Their Own Words: Spending Our Way Out of the Recession | Step Down Obama

    8. Pingback: In Their Own Words: Spending Our Way Out of the Recession | Conservative Principles Now

    9. Pingback: Treasury to TARP Inspector General: Drop Dead | Step Down Obama

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