The TARP fund helped ease last fall's financial panic but was less successful in meeting other goals Congress set. These include reducing foreclosures and unfreezing credit for consumers and businesses, according to a report issued Wednesday by a TARP watchdog panel.
"Congress set goals for the TARP that went well beyond short-term financial stability, and by that measure problems remain," said panel chair Elizabeth Warren.
The report found the program's effects have been uneven. A $75 billion initiative to stem the wave of foreclosures has "failed," and the Treasury Department's actions have granted big banks an "implicit guarantee" that the government would bail them out, Warren said.
The government still is guaranteeing billions of dollars in bank assets, which along with debt guarantees from the Federal Deposit Insurance Corp., amount to ongoing subsidies that may mask the condition of the financial markets, the report said.
Treasury responded that the TARP has "by every measure ... succeeded in achieving its primary goal of economic stabilization."
But the TARP panel, established by Congress to provide independent oversight, noted that bank failures continue and access to credit remains tight. It said the program's progress toward goals necessary for financial stability and economic growth "is less clear."