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Barofsky: TARP Program Fueled Public Distrust

The biggest cost of the TARP program might be the public's distrust of the government, according to inspector general Neil Barofsky. Ray Suarez reports.

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  • GWEN IFILL:

    The much-debated effort to save major banks from collapse drew praise and criticism today from its official watchdog. And President Obama said he plans to redirect some of that money to smaller banks and businesses.

    Ray Suarez has our lead story.

  • RAY SUAREZ:

    Special Inspector General Neil Barofsky issued his report a year to the month since Congress approved $700 billion to rescue big banks and other financial institutions. Barofsky appeared this morning on CBS' "The Early Show," among others. He said, if he had to give the federal effort a grade, it would be an incomplete.

  • NEIL BAROFSKY:

    There have been some successes, in — as far as pulling us back from the brink of a financial collapse. But, as far as restoring lending, helping homeowners, helping small businesses, that hasn't materialized yet. So, we still have to wait and see.

  • RAY SUAREZ:

    Barofsky is himself a Treasury Department employee. But he was blunt in his criticism of the department.

    His report said taxpayers view the Troubled Assets Relief Program, or TARP, with "anger, cynicism and distrust." He blamed a "lack of transparency" in the program and "less-than-accurate statements." And he said Treasury should have made banks explain publicly how they used the rescue funds.

    To date, the program has spent more than $450 billion, and banks have repaid $73 billion. Most of the major banks are now reporting profits again, but Barofsky said today it's unrealistic to expect the government will ultimately get all its money back.

  • RAY SUAREZ:

    Against that backdrop, President Obama announced a new effort to refocus federal assistance toward community banks, smaller businesses and homeowners.

  • U.S. PRESIDENT BARACK OBAMA:

    Thank you.

  • RAY SUAREZ:

    He spoke in Landover, Maryland.

  • BARACK OBAMA:

    There are still too many entrepreneurs who can't get the loans they need to open up their doors and start hiring. There are still too many who are struggling to make payroll and to stay open. And there are still too many successful small businesses that want to expand further and hire more, but just don't have the capital to do it.

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