Neil Barofsky, the man tasked with overseeing the administration of the Troubled Assets Relief Program (TARP), told Congress in a report released Sunday that the bank bailouts have cleared the path to another financial crisis -- potentially even more grave than the 2008 crisis.
“(E)ven if TARP saved our financial system from driving off a cliff back in 2008,” Barofsky wrote, “absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.”
The special inspector general for TARP added: “It is hard to see how any of the fundamental problems in the system have been addressed to date.”
“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,” the report said.
“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 as necessary to save systemically significant institutions,” Barofsky wrote to Congress.
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He is absolutely right.
ReplyDeleteWe must have real reform or we are toast.
Just what we all want ...a clear path to another bigger crisis.
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