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Treasury Department Secretary Timothy Geithner defended the effectiveness of the $700 billion financial rescue program known as TARP, as it prepares to wind down this fall. Judy Woodruff reports on Tuesday's hearings on the financial rescue package.
The $700 billion financial rescue program known as TARP is set to wind down this fall, two years after it was created. But there are still questions about its effectiveness. That was the subject of a Capitol Hill hearing today.
Judy Woodruff has the story.
When Congress authorized a rescue for banks and other institutions at the height of the financial crisis in 2008, it created an oversight panel to ensure accountability. Chaired by Harvard Law Professor Elizabeth Warren, the panel has spent months grilling industry officials.
Today, it heard testimony from Treasury Secretary Timothy Geithner.
TIMOTHY GEITHNER, U.S. Treasury Secretary:
To date, more than half of all the money dispersed through the TARP has been repaid. TARP investments have generated $24 billion in additional revenue for taxpayers.
That money has come from large banks who repaid the government. But major sources of friction remain, including a part of the TARP program aimed at helping homeowners avoid foreclosure.
ELIZABETH WARREN, chairwoman, Troubled Assets Relief Program Oversight Committee: What is the metric for success here? Is it 120,000 families saved over 15 months, at a time when 186,000 are posted for new defaults and foreclosures every month?
You look at its results family by family, foreclosure by foreclosure, change in monthly payments by change in monthly payments, but recognizing that — and on this I think we agree, these programs were not designed and could not have been designed responsibly to try to prevent a set of foreclosures that, tragically, were probably unavoidable.
Geithner acknowledged the government will likely lose money on the bailout of insurance giant AIG, but he said, overall, the program helped stabilize the economy at a pivotal moment.
I think that the American public was left with the impression that the government of the United States came in and wrote checks for $700 billion to our nation's largest financial institutions and that they will never see that money again.
The reality, of course, is very different. As I have said, we've only put out about half of that authority. We have more than half back.
Those are the facts and realities of this program.
It is a remarkably effective program.
Out of the hundreds of billions of dollars originally authorized, the Congressional Budget Office estimates that, ultimately, taxpayers will lose $109 billion on the TARP program.
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