Out of Control Policy Blog

A Coming Bailout Failure

There have already been seven bank's that received TARP money in 2008 to keep them alive through the housing slump induced recession that have failed. Now the WSJ reports that 2011 could see as many as 100 banks fail that received TARP money:

Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.

The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program.

When TARP was created in the heat of the financial crisis, government officials said it would help only healthy banks. The depth of today’s problems for some of the institutions, however, suggests that a number of them were in parlous shape from the beginning.”

Shocker. The bailout wasn't effective, efficient, or honest.

See the whole piece here.

Anthony Randazzo is Director of Economic Research


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