The Troubled Asset Relief Program, commonly known as “TARP,” has been on the forefront of financial news reports since it was passed more than a year ago. Just last week, the program received another hit to its already diminished reputation.
Washington first created the 700 billion dollar relief program in order to stabilize the financial system that fell into crisis after the housing bubble burst. Congress immediately received negative media attention after rushing the implementation to the American people, many questioning the potential success of the program. Companies who have received TARP funds have been rushing to pay the debt back in order to relinquish government control over their policies and functions such as executive compensation.
Recently, Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program, sent a message to both President Obama and the Democratic majority of Congress in his 224 page quarterly report. Though TARP has been somewhat successful in stabilizing the overall financial systems, Barofsky states that it has not been able to restore consumer and business lending or to significantly prevent home foreclosure.
The obstacles this program would face in its attempts to help the financial system of the United States have been present from its conception. The plan was devised in a short amount of time by congressmen and women under tremendous pressure to create a program that could fix the economy. The end result provided more power to the government, and has been considered a conspiracy by the government to take freedoms away from the American public. As Rahm Emanuel declared, “you don’t ever want a crisis to go to waste.”
The main concern in Barofsky’s report is that nothing has been done to actually fix the flaws in the system that caused the crisis in the first place. Barofsky says that the funds, work, and time used “will have been for naught if we do nothing to correct the fundamental problems in our financial system and end up in a similar or even greater crisis in two, or five, or ten years’ time.” He paints a vivid picture where “TARP” is just a patch in a dam that is about to break.
Republican leaders are deeply concerned about the report, and are now using it to further discredit the Democratic- led Congress. Senator Susan Collins, (R-MA), said “it appears that ‘too big to fail’ institutions are even larger and possibly more interconnected as a result of TARP assistance. The market mentality now seems fixed that the U.S. government will continue to step in and bail out giant financial institutions.”
It seems that the United States government has not fixed the problems that plague the financial system as they claimed, but rather provided a temporary solution. It is only a quick fix that pushes the irresponsible choices of today’s leaders on future choices. We truly won’t know the damage that this program has levied on the U.S. financial system until twenty or twenty-five years down the road.
