The Government Accountability Office issued an interesting report yesterday about the TARP bank bailout program. GAO’s report, which focused on the troubles of banks that still have TARP money, told a story that Treasury has not been telling us.
Here are some of the highlights. The GAO found that nearly half of the banks that have returned their TARP money have done so with money from other taxpayer-funded programs that support banks. GAO also found that, as of the end of last year, 130 of the 352 banks that are still in TARP were on the FDIC’s problem bank list, which means they are having such severe problems that they might fail. The remaining TARP banks are less profitable, hold less capital, and hold worse assets than their counterparts that have already left TARP or were never in it. More than forty percent of the remaining banks have failed to make dividend and interest payments.
This picture of the seamy side of TARP is one that the government would prefer we did not see. GAO called Treasury out for failing to be transparent about the poor state of the remaining TARP banks as compared to other banks. Treasury should heed GAO’s recommendation and come clean about the likelihood that many TARP banks will not pay their money back. Taxpayers who put their money on the line have a right to know whether they should expect to get it back.