Geithner Extends Bailout Until Next Fall
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
Today, the Obama administration extended the controversial Troubled Asset Relief Program, known as TARP. In a letter to Congress, Treasury Secretary Timothy Geithner said TARP would operate through early October of next year. That extension came as TARP received a report card from the panel that Congress appointed to oversee it.
NPR's John Ydstie has both stories.
JOHN YDSTIE: The report from the congressional oversight panel was really an assessment of the TARP's performance during its first year. And despite the controversy surrounding the program, panel member Richard Neiman said that TARP had succeeded in its basic mission.
Mr. RICHARD NEIMAN (Member, TARP Congressional Oversight Panel): The report clearly gives credit to TARP for having achieved the primary objective of restoring general financial stability and liquidity in the financial system.
YDSTIE: But Neiman, who is also New York state's superintendent of banks, said the $700 billion program faced challenges in achieving its other goals.
Mr. NEIMAN: And those were evolved around the increasing of foreclosures that are facing our country as well as issues around credit availability particularly for small businesses.
YDSTIE: Over the past year, most TARP resources have gone to shore up large Wall Street banks and financial institutions, but the injections of capital have not succeeded in providing enough credit for many small businesses to create jobs. In his letter notifying Congress of the program's extension, Secretary Geithner said that in the coming year the TARP program would focus on providing lending to small businesses along with additional efforts to head-off foreclosures. Former IMF chief economist Simon Johnson is skeptical.
Mr. SIMON JOHNSON (Former Chief Economist, IMF): Well I think that won't make much difference to be honest, unfortunately. That refocusing is mostly for political reasons.
YDSTIE: Johnson, now an MIT professor, says only the recovery of the economy will make a significant difference in small-business job creation and a reduction in mortgage foreclosures. Johnson says the TARP program needed to be extended because the financial system still faces challenges from shaky credit card and mortgage financing, but he said the terms for recipients of aid should be tougher in the future.
Mr. JOHNSON: Much tougher, much more favorable to the taxpayer and less favorable to the bankers who make the big bad mistakes.
YDSTIE: Secretary Geithner suggested in his letter that in the end the TARP program would cost taxpayers around $140 billion. Bank of America said today it has completed repayment of the $45 billion it owed the TARP.
John Ydstie, NPR News, Washington.