Bailout Costing Taxpayers Billions, TARP Watchdog Warns

Guess what, American taxpayer: More than four years after the financial crisis started, you are still on the hook for a nearly $15 billion investment in a subprime mortgage lender.

That's just one of a litany of troubling facts in a new report by Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, which pumped more than $600 billion into failing banks and other companies during the crisis. The report details the many billions of taxpayer dollars still sunk into hundreds of struggling banks, some of which are still failing, and the risks still festering that could create a future crisis.

TARP Profit A Myth, Claims TARP Inspector General Christy Romero

Contrary to the Obama administration's claims, the bailouts of the financial and auto industries have not turned a profit for the U.S. government and may never turn a profit, according to a grim new assessment by the bailout's watchdog.

Even by non-financial standards the bailout has been less than a roaring success and may be helping to lay the groundwork for future financial disasters and bailouts, writes Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, in her latest quarterly report to Congress, released Wednesday morning.

"It is a widely held misconception that TARP will make a profit," she writes right at the top of her 327-page report. "The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost)."

That directly contradicts the Treasury Department's repeated claims that the government will eventually at least break even on the bailout. So far, the government has gotten back about $300 billion of the $414 billion it has paid out to banks, but some banks paying back TARP have simply used other government money to do so, as The Huffington Post and the Wall Street Journal have reported.

Bailed-Out Companies Pressured TARP Pay Czar To Keep Executive Pay High: Report

WASHINGTON, Jan 24 (Reuters) - Pressure from financial institutions and Treasury officials undermined an effort to limit executive pay at seven companies rescued with taxpayer money, a new government audit showed on Tuesday.

The official overseeing executive pay for bailout firms limited cash compensation and made some reductions in pay, but still approved compensation packages in the millions, the TARP (Troubled Asset Relief Program) inspector general said in the report.

Former U.S. pay czar Kenneth Feinberg approved pay packages worth $5 million or more from 2009 to 2011 for 49 top earners, the report said.

"Special Master Feinberg said the companies pressured him to let the companies pay executives enough to keep them from quitting, and that Treasury officials pressured him to let the companies pay executives enough to keep the companies competitive and on track to repay TARP funds," the report said.

Public anger over high pay and billion-dollar bonuses at bailed-out firms in 2008 prompted the Obama administration to limit cash salaries at $500,000 and approve compensation packages for the companies' top earners.