A congressional panel reported yesterday that the Troubled Asset Relief Program (TARP)’s final cost will “be less than expected, in part because it will accomplish far less than envisioned for American homeowners.” Had the government done enough to prevent foreclosures instead of paying “a heck of a lot more attention [to] Wall Street” then the bill would have been closer to the projected $700 billion instead of a mere $25 billion, reported Tim Massad, the acting assistant secretary for financial stability of the U.S. Treasury.
The Treasury reported spending about $1 billion in TARP money for foreclosure prevention, with each successful HAMP loan modification costing taxpayers about $20,000. $45.6 billion were allocated for HAMP, the FHA refi program and the Emergency Homeowners’ Relief Program – all under fire from congressional Republicans who argue that housing programs are costly and ineffective and should be cut from the federal budget.
Other critics of TARP say that the $25 billion actually spent was actually too much anyway, and perpetuated the “too big to fail” myth among institutions most likely to take advantage of it. The same panel that asserted that not enough money was spent through the program also stated that “very large financial institutions may now decide to take inflated risks expecting that, if the gamble fails, taxpayers will bear the loss”. Massad countered this by stating firmly that this will not happen in the future.
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