TARP Helped Economy, Created Distrust

A government watchdog issued a blunt report saying that the U.S. Treasury did not hold bailout recipients accountable. They did not have to show how they spent their funds. They did not have to go public.

The bailout operated behind a veil of secrecy.

Treasury issued a lot of statements that were misleading or plain mendacious.

The Washington Post reports:

Barofsky said public suspicion was fed by Treasury's decision not to require banks to report how they used their rescue money and its "less-than-accurate" statements describing the financial condition of nine large banks that benefited from large infusions of aid. The TARP program began under the administration of President George W. Bush and has expanded under President Barack Obama.

The program has come under criticism in Congress from across the political spectrum. Liberals maintain the program needs to shift its focus from big financial firms to small businesses and homeowners. Conservatives insist the program has been an unnecessary intrusion into the financial sector and should end swiftly.

On Wednesday, Obama is expected to announce a new TARP program to assist community banks. The American Bankers' Association has asked for $5 billion in rescue-fund money to help small banks extend more loans.