Congressional Oversight Committee: TARP Shortchanged Homeowners

March 25, 2011 (Chris Moore)
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In one of its last reports issued before its demise, the Congressional Oversight Committee (COC) faulted the Troubled Asset Relief Program (TARP) for failing to spend enough money to curb foreclosures. TARP was launched by the Bush Administration in response to the 2008 financial crisis, but was also to include aid to help struggling homeowners.

In the report, COC credited TARP for providing critical support at a time of profound uncertainty citing the restructuring of insurer American International Group Inc. (AIG) and providing aid to the ailing automakers as examples of the programs success.

However, Sen. Ted Kaufman, chair of the COC commented that in his opinion, more money was spent on bailing out Wall Street and too little was left in aid to ailing homeowners.

“One of my major concerns is that there was a heck of a lot more attention paid to Wall Street than there was to Main Street,” said Kaufman.

The original forecast for the federal bailout of the U.S. financial system was expected to cost as much as $700 billion. TARP was created to facilitate the dispersal of the funds. The Treasury Department originally allocated almost $46 billion for three major housing programs to help distressed homeowners, but according to the panel, only about $1 billion in TARP funds has been spent on government anti-foreclosure programs.

The lack of success of these programs has led House Republicans to terminate all of the Obama Administrations anti-foreclosure programs except for the Home Affordable Modification Program (HAMP), which is expected to be voted on next week.

Despite the fact that the Obama Administration has threatened to veto any such bills and the Senate has declared they will not take up any of the anti-foreclosure bills, Republicans continue to press on and at the very least are sending a very strong message.

At the time TARP was enacted, it was impossible to know exactly how much the program would ultimately cost. TARP is now expected to cost the taxpayers about $25 billion after all the paybacks which makes the $1 billion used to aid the ailing homeowners seem pretty insignificant compared to the $699 billion used to bailout Wall Street.

Kind of makes you wonder who our government works for.

Tags: Congressional Oversight Committee, TARP, HAMP, ailing homeowners, Wall Street, Main Street, Treasury Department, House Republicans