Economists Criticize TARP Management To Congressional Panel
By Kristina Peterson, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Several prominent economists told a Congressional
oversight panel on Thursday that the government's Wall Street bailout had erred
in not imposing stricter regulations on the financial system.
A group of academics and economists agreed that Congress was right to pass the
Troubled Asset Relief Program earlier this year, but most said the government
hadn't gone far enough to ensure that top executives' compensation was limited
and that debt-strapped Americans would also see relief.
"At the heart of every crisis is a political problem--powerful people, and the
firms they control, have gotten out of hand," said Simon Johnson, economics
professor at the Massachusetts Institute of Technology, in prepared remarks. "
Seen in this context, TARP has been badly mismanaged."
Not only did many top executives retain jobs they should have lost, the
bailout ensured that the best connected remained so, Johnson said.
"Financial executives with strong connections to the current and previous
leadership of the New York Fed...have great power and enormous market value in
this situation," Johnson said. Treasury Secretary Timothy Geithner was most
recently president of the Federal Reserve Bank of New York.
Dean Baker, co-director of the Center for Economic and Policy Research, agreed
that the bank bailout failed to impose the necessary restrictions to limit
executive pay and help Americans struggling with mortgage payments.
"It is very difficult to justify such an extraordinary grant of government
largess without any quid pro quo," Baker said in his testimony.
- By Kristina Peterson, Dow Jones Newswires, 202-862-6619; kristina.peterson@
dowjones.com
(END) Dow Jones Newswires
11-19-091008ET
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