TARP chief Neil Barofsky finds bailout funds boost loans
Maximum number of U.S. banks said that they were helped by the federal bailout funds to shun a slump in lending in the recession-mired times.
Inspector General for Troubled Asset Relief Program, Neil Barofsky said that 40% of the 360 banks surveyed had engrossed unexpected losses by making capital cushions with funds provided under the TARP.
Mr. Barofsky, who served as prosecutor at the U.S. Attorney's Office for the Southern District of New York for a long time, has been given the responsibility of screening how tax payers' hard earned money ($700 billion) was spent.
Roughly 33% of the financial institutions invested a fraction of the TARP funds into mortgage-backed securities.
In the survey of 360 banks, 83% lenders said TARP funds were used to increase Loans. 29% lenders used TARP money to provide housing loans, 18% used TARP funds for business mortgages and 17% made other consumer loans with TARP funds.
It may be noted here that only 4% banks used TARP finances for acquisitions.
Neil Barofsky, TARP inspector general recommended that TARP receivers should put forward reports regarding activities such as lending, investments, acquisitions etc. to Treasury and recipients should also specify what did they do which was not possible without TARP funding.
Mr. Barofsky supervised the survey conducted from Feb. to June to clear the doubts in the minds of many legislators.