Looks like the government did create a second depression

Watchdog: Bailouts created more risk in system

January 31, 2010 by Daniel Wagner and Alan Zibel

WASHINGTON—The government’s response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned.

The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” Barofsky wrote.

US economic rescue failing to meet key goals:auditor

January 31, 2010 by AFP

The 700-billion-dollar US government effort to rescue the financial system has failed to meet key goals such as sparking lending and curbing risky activities by banks, a special auditor said Sunday.

The special inspector general for the Troubled Asset Relief Program said in a report to Congress that it is too soon to measure the overall success of the program passed at the height of the financial crisis in October 2008.

The quarterly report said that because of TARP, “there are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008.”

But the report also stated that “many of TARP’s stated goals… have simply not been met” and that the potential for a new crisis looms without major reforms.

…

Despite the explicit goal to increase financing to US businesses and consumers, “lending continues to decrease,” said the report from inspector general Neil Barofsky.

It also noted that TARP has failed to live up to the “explicit purpose” stated by Congress of “preserving homeownership and promoting jobs.

“The TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation,” it said.

[Via http://feltd.wordpress.com]