US watchdog says TARP helped stabilize system,
Wed Oct 21, 2009 8:57am EDT
WASHINGTON, Oct 21 (Reuters) - The U.S. government's $700 billion financial rescue program has helped to stabilize the system, but may be creating systemic problems by fueling a belief banks will always be bailed out, a watchdog for the program said on Wednesday.
"Compared to where we were last October there is no question that the system if far more stable. We were on the precipice and I think the (Troubled Asset Relief Program) contributed with the other programs to pull us back," Neil Barofsky, the special inspector general for the program, told CNBC.
"But I do think because of the moral hazard, because of some systemic risks that are associated with making these institutions bigger and bigger ... systemically we may be in a more dangerous place even then we were a year ago," he said. (Reporting by Tim Ahmann, Editing by Chizu Nomiyama)
Elsewhere at NPR's Marketplace:
TARP unlikely to bring taxpayer returns
... [Neil Barofsky] said that out of the $700 billion bailout, there's about $317 billion left. He says we will not get all the money back. Mainly because of AIG and the auto companies, which took some of that TARP money. And he said this this morning on CNBC. After saying that the TARP was successful in rescuing the banks, he did have this caveat.
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