In a report that will be released today, watchdog Neil Barofsky said the government's $700 billion financial industry bailout has played a significant role in bringing the economy back from the brink of collapse. Barofsky is the special inspector general for the U.S. Treasury's Troubled Asset Relief Program (TARP), which has been investing billions of government dollars in banks.
"With respect to whether TARP has succeeded in restoring liquidity and stability to the financial system, there are without question significant signs of improvement in the stability of the system," Barofsky said before the Senate last month.
Former Manhattan federal prosecutor Barofsky, who was appointed to his TARP post in December of 2008, had expressed concern over the bailout July 22, due to its possible $23.7 trillion cost to taxpayers.
He still thinks taxpayers may never recoup their money, and that TARP needs more transparency so that the public understands how their money is being spent. Barofsky also acknowledges there is still plenty of work to be done.
"The risk of foreclosure continues to affect too many Americans; unemployment continues its rise to levels that Treasury has characterized as "unacceptable"; the so-called "toxic" assets that helped cause this crisis for the most part remain right where they were last fall--on the banks' balance sheets..." he said.
Meanwhile, the Obama administration will wind down its financial bailout programs, Timothy Geithner, the Treasury's secretary, told Reuters Tuesday.
The administration will focus on "more-targeted programs directed at what are the principal areas where there's still weakness in access to credit," he said, specifically citing housing and small businesses.