The Impact of the Troubled Asset Relief Program on the US Financial System and Economy
by Simon Johnson, Peterson Institute for International Economics
November 19, 2009To save the banking system in the face of generalized panic, the United States must: 1) prevent banks from collapsing in an uncontrolled manner; 2) take over and implement orderly resolution for insolvent banks; and 3) immediately address underlying weaknesses in corporate governance that created potential vulnerability to crisis. Considering these three recommendations, Simon Johnson testifies that the Troubled Asset Relief Program (TARP) has been badly mismanaged. Its funds supported troubled banks and the executives who ran them into the ground. Additionally TARP's implementation exacerbated the perception that some financial institutions really are too big to fail.
View full document [pdf]