Lying about TARP funds is bad, but focus should be on restoring health

Lita Epstein

While most news reports on Special Inspector General's Neil Barofsky focus on how the Treasury Department and the Fed lied about TARP being used to bail out "healthy" banks, we're spinning our wheels on trying to figure out who lied, and what they said. How will knowing who lied change what needs to be done today?

One of the key points of misinformation that damaged Americans' trust in government officials came when Fed and Treasury officials gave the unrealistic expectations that the bailout would help banks increase lending. Barofsky says in his report: "Treasury and the TARP program lost credibility when lending at those institutions did not in fact increase and when subsequent events -- the further assistance needed by Citigroup (C) and Bank of America (BAC) being the most significant examples -- demonstrated that at least some of those institutions were not in fact healthy."