Treasury touts success of TARP as oversight ends

Reuters News
Posted: Mar 21, 2011 2:54 PM
Treasury touts success of TARP as oversight ends

WASHINGTON (Reuters) - The Treasury's last man in charge of the $700 billion financial sector bailout program has two words for congressional overseers: It worked.

Testifying at the Congressional Oversight Panel's final hearing on Friday, Treasury's bailout chief Timothy Massad said the program "brought stability to the financial system and laid the foundation for economic recovery."

The much-maligned Troubled Asset Relief Program is estimated to cost taxpayers as little as $25 billion -- a far cry from initial projections -- and even some of the program's harshest critics admit it helped pull markets "back from the abyss."

"Today the panic of 2008 is a slowly fading memory, and the TARP played a role in turning the page on that grim chapter in American history," said former Democratic Senator Ted Kaufman from Delaware, the chairman of the congressional panel.

Major Wall Street banks such as Bank of America Corp, Goldman Sachs Group Inc and Citigroup Inc have long repaid the government, and the Treasury Department has recapitalized American International Group Inc, though it now holds a 92 percent stake in the insurer.

TARP still has some open sores, including the Obama administration's housing rescue program.

The administration initially predicted the Home Affordable Modification program (HAMP) would help up to 4 million at-risk homeowners to avoid foreclosure. But in nearly two years of operation, the program has only provided permanent loan modifications for a little more than 600,000 homeowners.

The congressional panel estimated that HAMP will prevent fewer than 800,000 foreclosures in total.

"It is no wonder, then, that many Americans view the TARP as a program designed and executed for the benefit of Wall Street CEOs rather than Main Street homeowners," said Kaufman.

Republicans in the House of Representatives have vowed to kill HAMP, although Democrats argue that offering some help is better than offering none.

(Reporting by Rachelle Younglai; editing by Jeffrey Benkoe)