Every once in a while, someone writes a report that states the obvious facts that few in Washington D.C. care to hear.
The Special Inspector General of the Troubled Asset Relief Program on Saturday released one such report.
It’s conclusion: Bailing out America’s banks, as we did, appears to have averted a crisis, for now. But we also may have only set the stage for an even bigger crisis in the future.
“If TARP saved our financial system from driving off a cliff back in 2008,” the report said, “we are still driving on the same winding mountain road, but this time in a faster car.”
Let’s all hope, at least, that it’s a car made by government-owned General Motors Corp.
Click here to read the report.
None of the conclusions are all that surprising. Others have said these things, again and again. We can only hope that since it comes from an official source charged with overseeing TARP that our leaders will begin to listen.
I thought, I’d crib a few other points fromt the report’s executive summary:
* “On the positive side, there are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008. Many large banks have once again been able to raise funds in the capital markets, and some institutions — including some that appeared to be on the verge of collapse — have recovered sufficiently to repay their TARP investments years earlier than most would have predicted.”
* “Despite the fact that the explicit goal … was to increase financing to U.S. businesses and consumers, lending continues to decrease, month after month.”
* “To the extent that huge, interconnected, “too big to fail” institutions contributed to the crisis, those institutions are now even larger, in part because of the substantial subsidies provided by TARP and other bailout programs.”
* “To the extent that institutions were previously incentivized to take reckless risks through a “heads, I win; tails, the Government will bail me out” mentality, the market is more convinced than ever that the Government will step in.”
* “To the extent that large institutions’ risky behavior resulted from the desire to justify ever-greater bonuses … there has been little fundamental change in the excessive compensation culture on Wall Street.”