Bailout Watchdog: ‘Extremely Unlikely’ Taxpayers Would Recoup Tarp Monies

September 24, 2009

(ChattahBox)— As we approach the anniversary of the $700 billion TARP bailout program, Neil Barofsky, the special inspector general for the bailout program, or the “bailout cop,” prepares to deliver testimony before the Senate Banking Committee, detailing the progress made, since the program was implemented, as well as highlighting its failures.

His prepared remarks however, make clear that taxpayers should not expect to fully recoup the funds advanced to the troubled companies.

Barofsky’s testimony states that it is “unclear” if the government will meet its goal of “maximiz[ing] overall returns to the taxpayer.” “While several TARP recipients have repaid funds for what has widely been reported as a 17 percent profit, it is extremely unlikely that the taxpayer will see a full return on its TARP investment,” Neil Barofsky says.

Among other areas of concern are that of transparency and the failure of banks to increase lending to consumers, although lending has certainly been given a boost by the TARP funds. Regarding transparency by the Treasury, Barofsky believes the department can improve its efforts to better inform Congress and the public of how the bailout funds are being spent.

The department’s “basic attitude towards transparency,” “remains a significant frustration,” said Barofsky.

Barofsky believes more can certainly be done to avert home foreclosures and job losses, noting the 26-year high unemployment rate of 9.7 percent.

Of particular interest in Barofsky’s prepared testimony is a reference to an audit conducted by his office to determine if the government’s decision-making process was affected by any undue external influences.

Barofsky found three companies that were the subject of “undue external influences,” particularly one, which he didn’t mention by name:

“Among these three, one institution stood out. SIGTARP’s analysis indicated that discretion afforded this applicant in its approval was greater than that afforded other applicants,” said the bailout cop.

Barofsky’s report indicates that while the bailout program certainly prevented the collapse of the nation’s financial system, the Troubled Asset Relief Program, still is not fully meeting many of its smaller goals to provide a boost to the stagnant economy.

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