Inspector General of TARP Critical of its Performance

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The Inspector General agreed with the governments assessment of the TARP program's performance in rescuing the Wall Street banks. The largest banks are 20% larger than the were before the crisis and they are back to pre-crisis levels of profits. They remain "too big to fail" and because investors do not have to worry about defaults, they can borrow money at rates below those available to smaller banks. If the Treasury Departments goal was to preserve Wall Street it has been a huge success.

The report argues, however, that the other objective of TARP has been a big failure. Congress passed the TARP legislation with the assurance that TARP would purchase mortgages from homeowners in order to preserve home ownership and protect home values. The HAMP program, under the direction of Treasury, was a big flop.

Furthermore, Treasury has resisted real efforts to reform Wall Street. The banks have been restored to their prior dominance of the economy at the expense of Main Street and little has been done to keep them from creating the next crisis. It appears, the the Inspector General that, Treasury, which is staffed extensively with former Wall Street bankers, shares too many of the values of the banks that they came from.