“…it is not at all clear…that a Special Inspector General should be weighing in on government policy decisions, much less predicting the housing market or economy’s future.”
esterday we ran a post about the Special Inspector General for TARP’s Quarterly Report to Congress. The report was highly critical of the bailout’s inability to increase bank [...]

Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (that’s SIGTARP to you) has released his Quarterly Report to Congress, which you can read here in .pdf. The opening section of the Executive Summary is below. My own executive summary:

• The financial system is far more stable in parts than at the height of the crisis in fall, 2008. Banks can raise funds and many formerly on the verge of collapse have repaid the emergency government loans early. These repayments have resulted in a profit for the U.S. Treasury on some of the TARP investments, decreasing the cost of the bailout to taxpayers.
• The TARP goal of increasing financing to U.S. businesses and consumers has not been met, as lending continues to decrease and home foreclosures remain at record levels. The repayment of government funds by banks and the exit of the U.S. as a major shareholder in the banks have signficantly decreased the government’s ability to influence the policies of these financial institutions.
• Fundamental problems in the financial system have not been addressed to date, and “too big to fail” institutions are even larger, thanks in part to TARP and other bailout programs. Incentives to take reckless risk are even greater, as the market is convinced government will step in to cover losses that could threaten the system. Executive compensation also remains an incentive to take inordinate risks.
• The government’s efforts to support home prices risk re-inflating a housing bubble.