The federal government’s $700 billion Wall Street bailout last October prevented “an economic panic,” an independent panel concluded. The Congressional Oversight Panel said the Troubled Asset Relief Program “was instrumental in avoiding a global financial meltdown—a far worse scenario than we have today”—and cost about $200 billion less than was originally expected.
But the panel said that while TARP calmed Wall Street, the program did not slow home foreclosures, ease the credit crunch, or shore up small banks. The bailout sent the message that some institutions are too important to fail, the panel said. That helps those firms raise money, but makes it harder for smaller institutions to compete.
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