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 17,683.58 -46.53 -0.26%
Nasdaq 4,991.94 -17.27 -0.34%
S&P 500 2,068.76 -8.02 -0.39%
Treasuries 2.28 -0.11 -4.81%
Data as of 3:53am ET
Company Price Change % Change
Bank of America Corp... 16.94 -0.28 -1.63%
Micron Technology In... 18.32 -0.46 -2.45%
Frontier Communicati... 4.92 -0.03 -0.61%
Intel Corp 30.04 -0.14 -0.46%
Apple Inc 126.00 -0.60 -0.47%
Data as of Jul 6
Sponsors

Sections

America's biggest coffee chain is getting more expensive on Tuesday after another round of price changes. More

Greece voted by a big margin against Europe's latest bailout offer on Sunday, bringing the country closer to an economic disaster that could lead to its exit from the eurozone. More

Facebook's Sheryl Sandberg is joining the board at SurveyMonkey, her late husband's online survey and polling company. More

Entrepreneur Guillaume Gauthereau is on a mission to build a 50 to a 100 acre sanctuary in New York to provide refuge to honey bees. More

Building a strong credit score at a young age can save a lot of money down the road. Here's how to do it. More