Assessing the TARP on the eve of its expiration

From the Congressional Oversight Panel on Sept. 16:

The Congressional Oversight Panel's September oversight report, "Assessing the TARP on the Eve of Its Expiration," found that, although the Troubled Asset Relief Program (TARP) provided critical support to the financial markets at a time when market confidence was in freefall, the program has been far less effective in meeting its other statutory goals, such as supporting home values, retirement savings, and economic growth.

Under its original authorization, the TARP would have expired at the end of 2009. Late last year, however, the Secretary of the Treasury exercised his legal authority to extend the program until October 3, 2010, the latest date authorized by statute. This month, in anticipation of the final expiration of the TARP's most significant authorities, the Panel explored the program's overall effectiveness.

Although the TARP quelled the financial panic in the fall of 2008, severe economic weaknesses remain even today. Since the TARP was authorized in October of 2008, 7.1 million homeowners have received foreclosure notices. Since their pre-crisis peaks, home values have dropped 28 percent, and stock indices -- which indicate the health of many Americans' most significant investments for college and retirement -- have fallen 30 percent. Given that Treasury was mandated by law to use the TARP to address these measures of the economy, their lingering weakness is cause for concern.

Click here to read the report.