Issa: TARP's Failures Protect Too Big To Fail Banks

From yesterday's TARP Congressional hearing with Neil Barofsky.

Video - Mar. 30, 2011 - Rep. Darrell Issa (R-CA), Chairman of the House Committee on Oversight and Government Reform

The hearing explored whether financial markets and market participants perceive our largest financial institutions as "too big to fail" despite passage of the Dodd-Frank Act and subsequent financial regulations and, if so, the implications of such a perception.

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Criticism of TARP ‘Moral Hazard’ Unfair, Massad Says

“We recognize that moral hazard is a real and significant concern” in the Troubled Asset Relief Program, Timothy Massad, acting assistant secretary for financial stability, said in a hearing before a House Oversight Committee panel today. “But to suggest that it is TARP’s main legacy is to ignore the facts, and to confuse the response to a crisis with the need to address the causes of the crisis.”

Massad was responding to criticism from Neil Barofsky, special inspector general for TARP. Barofsky told the House panel’s TARP subcommittee today that the program’s “most significant legacy may be the exacerbation of the problems posed by ‘too big to fail,’ particularly given the manner in which Treasury executed the bailout.”

TARP largely spared “executives, shareholders, creditors and counter parties, reinforcing that not only would the government bail out the largest institutions, but would do so in a manner that would do little harm to the responsible stakeholders,” Barofsky said.

http://www.bloomberg.com/news/2011-03-30/criticism-of-tarp-moral-hazard-unfair-u-s-official-says-1-.html

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Background:

Where the Bailout Went Wrong: Parting Shot From TARP Inspector General Neil Barofsky (NYT Op-Ed)

Comments

[Double G]

I am always amazed at the political ramblings of the two parties. They both are and have been directly involved with TARP programs which the end result has been the saving of the large contributors to both parties re-election campaigns. Come hell or high water, no matter which party is in power, the biggest banks will not fail period. Look at what Paulson did with the money from the first TARP, when he said he needed it to buy toxic assets, that didn't happen, the Fed did it. Not surprisingly the biggest banks got larger over this crisis and both parties were involved with the scamming of the American people. The political and economic advantage of these entities far out weighs the position of the people who pay for it all, the American people.

We are just seeing the influence of these most powerful economic power brokers and the politicians fighting back and forth with the banking and financial industry getting what they paid for, through the lobbying process in the halls of Congress. The end result is both parties play the good cop, bad cop scenario while the American people are duped into paying for the reckless behavior of the banking and financial industries, then blame each other for the problems. The dance never ends, the American people are only asked to dance when it is time to pay.

[DailyBail]

very well said greg...

[Double G]

Thank you and thank you for a great website. You've got it right on!!!