Bank bailout: Don't bet on another one

By CNNMoney.com staff


NEW YORK (CNNMoney.com) -- The perception that a $700 billion bailout aided financial institutions more than consumers could make it harder to do something similar in another crisis, a government watchdog group said Thursday.

"The program is now widely perceived as bailing out Wall Street banks and domestic auto manufacturers while doing little for the 14.9 million workers who are unemployed, the 11 million homeowners who are underwater on their mortgages, or the countless other families struggling to make ends meet," the Congressional Oversight Panel said in its report.

The report said the Troubled Asset Relief Program (TARP), approved by Congress in 2008 at the height of the financial crisis, succeeded in stabilizing the financial system.

But it said the program's other goals, protecting the homes and savings of Americans, were not met. Since October 2008, more than 7 million people have received foreclosure notices, and home prices and stock values have dropped roughly 30% from their pre-crisis peaks, the report said. And hundreds of small banks have been shut down or liquidated, while larger banks have fared better.

Treasury spokesman Mark Paustenbach countered the criticisms, noting that one of the economists consulted for the report has stated that presidential policies have saved 8.5 million jobs.

"Small banks that have received TARP funds have increased lending more than comparably sized banks that did not receive TARP funds," he said. "Treasury helped to restart the asset-backed securitization markets that provide credit to consumers and small businesses."

The panel's chairwoman, Harvard University professor Elizabeth Warren, recused herself from the report last week, according to Damon Silvers, another member of that panel.

Warren was engaged in conversations with the White House about working at Treasury as a special adviser, according to a source familiar with the conversations.

Sources tell CNN that Warren will be named as an assistant to the president so that she can help shape the consumer financial protection agency that's part of the new Wall Street reform law.

President Obama is expected to announce the appointment of Warren, who came up with the idea for the agency, later this week. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,677.90 216.58 1.32%
Nasdaq 4,452.79 69.95 1.60%
S&P 500 1,950.82 23.71 1.23%
Treasuries 2.28 0.05 2.06%
Data as of 6:49am ET
Company Price Change % Change
Apple Inc 104.83 1.84 1.79%
Bank of America Corp... 16.60 0.20 1.22%
AT&T Inc 33.66 -0.84 -2.43%
Microsoft Corp 45.02 0.64 1.44%
Facebook Inc 80.04 1.67 2.13%
Data as of Oct 23

Sections

Buffett's investment firm lost big on Coca-Cola and IBM this week, but that's about the extent of his losses this year. More

Regulators are about to reveal the results of an extensive health check of Europe's top 130 banks, indicating which may need a cash infusion. More

Using technology developed for the military and implemented in Iraq, schools have installed alarm systems that detect gunfire. More

Dressing up in crazy costumes, traveling the world, posing for photos -- and getting paid to do it. Here are journal entries from a day in the life of professional "cosplay" character, Linda Le. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.