Treasury defends TARP, provided 'critical assistance' to struggling homeowners
The Treasury Department is backing the success of the Troubled Asset Relief Program (TARP) with claims that taxpayer-based bailout initiatives may be unnecessary in the future as a result of strong government intervention put in place during the current recession. The declaration was provided to HousingWire in response to a report out today by the Congressional Oversight Panel (COP). According to COP, the unpopularity of TARP will halt similar government responses to future financial crises. TARP is set to expire Oct. 3 and has a cap of $475 billion as mandated by the signing of the Dodd-Frank Act in July. Treasury spokesperson Mark Paustenbach said Wall Street reforms contain clear mechanisms for shutting down troubled financial institutions with no cost to the taxpayer. "At the time, Treasury used the tools it had available properly and effectively to stem the deepening financial crisis, at a fraction of the cost originally predicted," Paustenbach said. According to the Congressional Budget Office costs will be 90% lower than the original $700 billion allocated to TARP. Paustenbach and other Treasury officials have said taxpayers stand to earn a profit on the bank program. "These efforts helped stabilize the financial system and provided critical assistance to struggling homeowners," Paustenbach said. Today COP even criticized the Treasury's transparency when implementing TARP. But through August 2010, the Treasury has published 198 TARP transaction reports, 21 monthly progress reports, 15 dividend and interest reports, 13 Home Affordable Modification Program (HAMP) reports and other disclosure documents. Additionally, Alan Blinder, an economics professor at Princeton University, who is cited in the COP report released a TARP study in July with Mark Zandi, chief economist for Moody's Analytics, citing the need for it. "We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0.," Blinder writes. Write to Jon Prior.