As TARP ends, a Treasury official defended the program as he faced critics who said it helped Wall Street, not Main Street. Image: Alan Cordova/Flickr

The Troubled Asset Relief Program was a success, according to the man in charge of the infamous government bailout program. In the final hearing on TARP before the Congressional Oversight Panel March 4, Timothy Massad, the U.S. Treasury official in charge of the program, said it prevented a collapse of the financial system and will cost taxpayers less than originally proposed. But critics on the panel said TARP helped Wall Street, not Main Street, and in terms of economic recovery the program was a failure.

Why Treasury believes TARP was a success

The Troubled Asset Relief Program ended March 4 after spending about $411 billion to bail out Wall Street banks, the U.S. auto industry and homeowners at risk of foreclosure. Timothy Massad, acting assistant secretary for the Treasury Department’s Office of Financial Stability, told the Congressional Oversight Panel for TARP that the program helped back the U.S. economy away from the brink of a depression at a time when no other government tools existed to do so. Congress authorized $700 billion for TARP at the height of the financial crisis in October 2008. About $475 billion will ultimately be spent. Initially, the cost to taxpayers was projected at $341 billion, but TARP is estimated to end up costing just $25 billion. Big Wall Street banks, such as Goldman Sachs, Citigroup and Bank of America, have paid back their bailout money. The government has recovered $277 billion in TARP money so far.

Why critics say TARP was a failure

The Congressional Oversight Panel pointed out the severely underperforming TARP-funded Home Affordable Modification Program as evidence that government bailout funds benefited Wall Street but left the rest of America in the lurch. Two years ago the administration said that HAMP would help up to 4 million homeowners avoid foreclosure. However, only about 600,000 homeowners have received loan modifications to date. The oversight panel estimated that the program would prevent less than 800,000 foreclosures, information House Republicans are using to justify killing HAMP. Massad warned against doing so. He said that killing the program would prevent tens of thousands of at risk homeowners from getting help at a time when the housing and employment markets have such a long way to go.

Moral hazard and the status quo

Critics of TARP on the oversight panel contend that TARP condoned moral hazard by assuring Wall Street banks that they are indeed “too big to fail.” Knowing they will be bailed out in future crises will encourage Wall Street banks to continue taking unnecessary risks to maximize profits. TARP critics refused to acknowledge Massad’s claim that TARP was a success because the banking system has returned to the status quo, unemployment remains unacceptably high and the U.S. economy remains weak. Joseph Stiglitz, a Nobel Laureate on the oversight panel, said that in the ultimate objective of economic recovery, TARP was a “dismal failure.”

Sources

MarketWatch

ABC News

Reuters

Consumer Reports cars leading in reliability include the Honda, which tied Subaru at the top of the list.

Consumer Reports cars that made the magazines “Best 10″ list don’t include the government bailout automakers General Motors and Chrysler. The best cars for auto financing are being built by Honda and Subaru, according to Consumer Reports latest automaker rankings. The automaker showing the most dramatic improvement is South Korean carmaker Hyundai,jumping to fourth place from ninth last year. Among American manufacturers, only Ford improved over last year. It scored one point better to pass Mitsubishi for 11th place.

Government bailout bottom dwellers

Consumer Reports cars were rated for performance, comfort, utility, fuel economy and reliability. The magazine tested more than 280 vehicles. It’s unlikely many will be taking out auto loans on vehicles by government bailout automaker Chrysler, which finished dead last. Fellow government bailout recipient General Motors was second from the bottom after axing a third of its models. Asian automakers still lead the pack. Despite bad publicity resulting from braking and unintended acceleration problems, Toyota finished third behind Honda and Subaru, which tied for first.

Subaru/Honda lead automaker rankings

Consumer Reports cars that stood out included Subaru’s redesigned Legacy sedan and Outback wagon–vehicles that raised Subaru into a tie with Honda in the magazine’s automaker rankings. Subaru moved into a tie for first. The redesigned 2010 Legacy sedan and Outback wagon raised Subaru’s overall test score from 78 points to 81. That helped contribute to its tie with Honda in our rankings. Hyundai models that pushed the Korean automaker up in the rankings include the Genesis sedan, Elantra, Santa Fe SUV, and Kia Optima.

American automaker rankings

American products singled out on the Consumer Reports cars list include the redesigned Ford Fusion and Mercury Milan, referred to as “excellent overall packages that provide good performance and fuel economy.” Consumer Reports said that the reliability of Ford cars is average or above average. But Ford cars you may want to stay away from include the Taurus, F-250 pickup and Explorer SUV.s New GM models like the Buick LaCrosse and Chevrolet Equinox tested well, but with no track record as of yet, reliability for these cars wasn’t rated. Chrysler managed to squeak in a Consumer Reports recommendation for the Dodge Ram pickup.

European automaker rankings

Consumer Reports cars on the list from Europe include the Mercedes-Benz GLK small SUV. Volkswagen’s Golf was rated as excellent. The Passat and Audi A3 have improved to be merely average. And Volkswagen’s Touareg finished dead last in reliability. For people committing to car loans, reliability should be a primary consideration and Consumer Reports cars are have been a long-respected reliable source for the facts.