The government's $700 billion bailout of the financial system helped prevent an all-out panic last fall but hasn't met many of the targets Congress set out, a watchdog panel says.
"Congress set goals for (the bailouts) that went well beyond short-term financial stability, and by that measure problems remain," said panel chair and Harvard Law school professor Elizabeth Warren.
The programs funded by the bailout — including bank capital injections, foreclosure relief and automaker rescues — were uneven in their success, the panel says. But it also noted that there is broad consensus that the programs helped avert a possible economic calamity.
The findings are part of a sweeping review of a year's work by the panel Congress created to oversee the Troubled Asset Relief Program, or TARP. It discusses the relative strengths of the diverse programs funded by TARP and evaluates them against standards Congress set.
The Treasury Department said in a statement that "by every measure, TARP has succeeded in achieving its primary goal of economic stabilization."
"Confidence in our financial system has improved, access to credit is increasing, and the economy is growing. The government is exiting from its emergency financial policies and taxpayers are being repaid," Treasury said. "Indeed, the ultimate cost of those policies is likely to be significantly lower than previously expected."
But the panel's report points to ongoing problems in the financial system as evidence that the bailouts did not address every concern Congress laid out.
Among the problems: Limited credit, ongoing bank failures, continued weakness at some large banks, escalating job losses and foreclosures and the banking system's continued reliance on government support.
TARP has gone through several iterations, it says, beginning as a program to purchase toxic assets from troubled banks, morphing into a capital injection effort, then becoming a source of funds for homeowners at risk of foreclosure and automakers on the brink of collapse.