TARP special inspector general Neil Barofsky said that the Troubled Asset Relief Program has failed

TARP's not working

NEW YORK (CNNMoney.com) -- The watchdog charged with monitoring the government's $700 billion bailout unleashed one of his harshest criticisms of the program to date, questioning its overall effectiveness.

In his latest quarterly report to Congress, special inspector general Neil Barofsky said that the Troubled Asset Relief Program, or TARP, has failed to boost bank lending as well as halt the spread of foreclosures -- two key aims of the sprawling program.

"Whether these goals can effectively be met through existing TARP programs is very much an open question at this time," Barofsky said in the report.

When Congress enacted TARP, the hope was that injecting capital into hundreds of banks would spur lending and keep the economy from spiraling even deeper into recession.

But since then, lending to both consumers and businesses has continued to decline.

Barofsky, whose office has been closely tracking the evolution of TARP, also criticized the Obama administration's Home Affordable Modification Program.

Even as Treasury allocated $35.5 billion towards that foreclosure-prevention program as of the end of last year, only 66,500 homeowners have received permanent modifications, with another 787,200 homeowners in trial modifications.

Under fire for the low number of people receiving long-term help, the Treasury Department in late November ramped up pressure on servicers to convert borrowers to permanent modifications.

Still, there is no sign that the rate of foreclosures is slowing down anytime soon. Earlier this month, RealtyTrac, the online marketer of foreclosed homes, reported that foreclosure filings surged to a record 3 million in 2009, up 21% from 2008.

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Everything obama does fails. Obama is a successful failure. His plan is to destroy the free enterprise system and "spread the wealth around".
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Letter in Support of the Thune Amendment to end TARP

January 21, 2010

Dear Senator:

On behalf of the National Federation of Independent Business (NFIB), the nation’s largest small business advocacy organization, I am writing in support of Senator Thune’s amendment to the debt limit bill (S.J. Res. 45) to end the Troubled Asset Relief Program (TARP) and require the federal government to reduce the federal debt with any returned TARP funds.

The $700 billion TARP program was initially passed in 2008 with the intention to prevent the insolvency of major U.S. financial institutions by cleaning up their balance sheets, thereby reducing any further damage to our nation’s economy and credit markets. The statute permits the Treasury Department to commit funds until October 3, 2010, and to spend funds for these purposes after that date. While the full $700 billion has not been allocated yet, almost $370 billion has been disbursed and the Treasury Department has already expanded the program beyond its original purpose. For instance, the Treasury Department has loaned TARP funds to auto companies and created new federal programs to serve various purposes.

Small business believes it is time to end TARP by passing the Thune amendment. We appreciate Senator Thune’s efforts to create an exit strategy for the unprecedented level of government ownership in American businesses. The full $700 billion that was originally allocated for TARP is no longer needed and should not be used as a bucket of money for the Treasury Department to create new federal programs.

Ending TARP and paying down the federal debt with returned TARP funds would signal to small businesses that Congress is beginning to get its fiscal house in order. If these debt levels are not addressed, small businesses will face a future of high interest payments, increased taxes, and reduced investment opportunities. Small business needs Washington to just get out of the way so they can get back to growing their businesses and creating jobs.

We look forward to working with Congress to end TARP. NFIB may consider the vote on the Thune amendment a Key Vote for the 111th Congress.

Sincerely,

Susan Eckerly
Senior Vice President
Public Policy