AS AN EMERGENCY response to quell the financial panic last fall on Wall Street and stabilize the banking system, the government's $700 billion bailout program worked. As a plan to improve the crisis well beyond short-term financial stability, it didn't.
That's the mixed report by the panel Congress created to oversee the Troubled Asset Relief Program, or TARP. It bears close examination because, according to the report, many congressional goals of the bailout program are not being met on Main Street.
Indeed, the report mirrors closely the criticism of the Rev. Jesse Jackson, who was in Toledo recently to push for more concentrated action on home foreclosure.
Among the oversight panel's ongoing concerns with uneven TARP funding are the continued problems of limited credit, bank failures, escalating job losses, and foreclosures. "The TARP program was not authorized for the sole purpose of bailing out large financial institutions," said panel chair, Elizabeth Warren.
"Congress specifically states in the legislation that it expects the benefits will be to get ahead of the foreclosure crisis and to deal with the larger economic crisis," added the Harvard law school professor. That hasn't happened.
The program, quickly enacted in October, 2008, to stem an investor run on the banking sector and later to rescue automakers on the brink of collapse, missed the mark with struggling homeowners and small businesses, said the panel. The Treasury Department conceded that unemployment and foreclosure rates remain high and lackluster lending still plagues the economy, but insisted "by every measure, TARP has succeeded in achieving its primary goal of economic stabilization."
Since when is helping to restore market functions and earning the confidence of consumers and businesses a secondary goal? Before Treasury Secretary Timothy Geithner decided that the bailout program should extend into 2010, he owed the American people better accountability and clearly more transparency about how the government intends to dole out future funds.