Treasury would 'do over' TARP if it could
If and when the U.S. government orchestrates another large bailout for the financial industry, the Treasury Department says there are key aspects it will change to past actions to avoid repeating mistakes. Darrell Issa (R-Calif.), the new chairman of the House Oversight and Government Reform Committee, kicked of his term with their first meeting Wednesday on the Troubled Asset Relief Program. TARP, which was created under the Bush administration in 2008, purchased distressed assets from financial institutions. It was once thought to cost taxpayers as much as $341 billion in August 2009, according to estimates from the Office of Management and Budget. That ultimate cost shrunk to a Congressional Budget Office estimate of $25 billion in November, after banks had repaid some of the funds to the government. Nonetheless, the Special Inspector General for the Troubled Asset Relief Program report Tuesday highlighted some problems with the TARP approach to too-big-to-fail banks, among other things. The Treasury agreed there were some problems with TARP. "There are parts we would change about TARP," said Tim Massad, the acting assistant secretary for financial stability at the Treasury (pictured at the meeting below), adding some things they would "do over" if given the change. The changes include a much greater dedication to transparency. Massad hinted that the taxpayer need not be kept so in the dark next time around. He also said that when TARP began, the Treasury Department was a weaker entity. "Hopefully, under Dodd-Frank we (now) have the tools," Massad added. Issa is looking to start off with a bang. His office is also expected to launch three investigations into the role financial institutions played in the Great Recession. These will likely include the role of Fannie Mae and Freddie Mac in the foreclosure crisis, the effect on the economy of business regulations such as the new Dodd-Frank Act and the Financial Crisis Inquiry Commission's failure to identify the origins of the meltdown. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.