TARP IG Notes Unintended Consequences

It seems that someone in government is actually willing to admit that the bailout frenzy we’ve seen over the last year will have serious unintended consequences beyond just putting the government further into debt. According to this CNN story, the special inspector general for the TARP program, Neil Barofsky, noted in a report released Wednesday that several hidden costs could result from the program.

These hidden costs/unintended consequences include the following:

• encouraging bad behavior on the part of financial institutions by bailing them out after risky practices
• making those institutions already deemed “too big to fail” even bigger through capital infusions
• growing distrust of the government due to the lack of transparency in the bailout process

This all is really just a matter of common sense. It’s been painfully clear that the government “recovery” efforts to “rescue” our economy are not working and may in fact be making things, well, worse.

I’ve written before on government “solutions” often causing more problems. It’s just nice to see someone in government actually acknowledging these common-sense notions, even if the chance of anything being done in the future to avoid these same mistakes is not likely.