Housing bail out not working, Barofsky says
Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), speaks during a hearing of the Senate Finance Committee on Capitol Hill July 21, 2010 in Washington, DC. The committee called Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), Elizabeth Warren, chair of the Congressional Oversight Panel, and Richard Hillman, Managing Director Financial Markets and Community Investment Team at the US Government Accountability Office, to testify about status of the TARP.
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Kai Ryssdal: The Senate Finance Committee got an earful today from Neil Barofsky, he's the TARP inspector general. He was talking about how taxpayers aren't getting their money's worth from the billions of dollars being spent to prevent foreclosures.
Marketplace's Nancy Marshall Genzer has more.
Nancy Marshall Genzer: Neil Barofsky doesn't mince words.
Neil Barofsky: I think we've fallen far short so far.
Barofsky is the Treasury Department's independent watchdog on the financial bailout. Today, he told Congress that Treasury's $50 billion program to help homeowners avoid foreclosure, isn't working.
Barofsky: And any claims of success just aren't credible, and I think that there's growing suspicion that this is a failed program.
The Treasury Department says it hopes to help at least three million homeowners over the next two years. But Barofsky says, so far, only about 165,000 have been kept out of foreclosure. And Barofsky was only talking about part of what Treasury is doing to shore up the housing market. The government has also given more than $100 billion to mortgage giants Fannie Mae and Freddie Mac to make good on failed mortgages. Is all this money well spent? David Resler says no. He's chief U.S. economist at Nomura Securities. He says the government hasn't stabilized the housing market enough.
David Resler: There's a lot of uncertainty about whether house prices have hit bottom or not. You don't want to be buying if you think that housing prices are going down in the next couple of years.
But Karen Petrou of Federal Financial Analytics says we did get our money's worth. The housing market is a lot healthier than it was a few years ago, and it would be impossible to heal the market completely.
Karen Petrou: The federal government cannot kiss the mortgage market's boo boo and make it better.
But Petrou says, while the money may have been spent wisely, it's now time for the government to get out of the housing business and slowly hand it back to the private sector.
In Washington, I'm Nancy Marshall Genzer for Marketplace.