The U.S. government's bailout has largely failed in its goal of helping U.S. homeowners avoid foreclosure and could end up costing more than expected, according to a report released Tuesday by the program's special inspector general's office.

Homeowners have lost 1.7 million homes through foreclosure since January 2009, the 338-page quarterly report notes. The Troubled Asset Relief Program has been responsible for less than half of the 467,000 permanent loan modifications that have occurred since its inception, according to the report, which said the program had fallen "woefully short" in preserving homeownership.

In addition, Treasury estimates earlier this month that TARP's bailout of insurance giant American International Group (AIG) would incur only a $5 billion loss -- instead of the $45 billion the department had estimated six months earlier -- may be overly optimistic, the report suggests. The Treasury changed the way it calculated the loss, according to the special inspector general's office, which criticized the department's lack of transparency.

"While AIG's prospects may have indeed improved during the course of those six months, there is a serious question over how much of this decrease comes from a change in the Treasury's methodology for calculating the loss as opposed to AIG's improved prospects," the report states.

Earlier this month, the Treasury Department also forecast the overall TARP would cost U.S. taxpayers approximately $50 billion, which comes to some 85% less than the $350 billion the Congressional Budget Office initially estimated. The inspector general's report says the financial estimates fail to account for the fact that "the biggest banks are bigger than ever" and that their credit ratings are higher than they should be because those ratings factor in the government's backing.

In addition, belief that TARP is nearing its end is "widespread, but mistaken," Neil Barofsky, the inspector general, wrote in the report. TARP still has $178.4 billion left unspent, as of Oct. 3, including more than $80 billion in funds that have already been committed. While the program isn't authorized to make new commitments, the already-allocated money can still be distributed, making it likely that TARP will end up spending far more after its yearlong extension ended this month than it did during its last year, he wrote.

Enacted during the George W. Bush administration, critics have called TARP an unproductive bailout for fiscally irresponsible financial institutions. In April, Pew Research reported that just 42% of Americans believed TARP helped prevent a more severe financial crisis, while the rest either said it didn't help or didn't know.

"Many Americans continue to view TARP with anger, cynicism and mistrust," according to the inspector general's report.


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sfamilyent

OK, we encouraged property ownership, we encouraged lending institutions to extend loans to those with low incomes, and we backed those actions. Fine. Let's take our medicine and move on... We need to attack the problem of no jobs and declining wages that we are experiencing because of our trade deficits and businesses moving our jobs to other countries. We need to encourage domestic production and discourage imports - to put our people back to work in our own national interest...

October 27 2010 at 8:10 AM Report abuse rate up rate down Reply
Sonny

It was just an excuse to put money into the hands of political contributors..............what else would you expect?

October 27 2010 at 6:37 AM Report abuse rate up rate down Reply
stubit586

The general public knew this from the initial TARP proposal in 2008, when 50% of the public said "no" and another 49% said "he*l no." About 1% approved of bailing out the banks.

October 27 2010 at 2:56 AM Report abuse +3 rate up rate down Reply
mikfete58

Part I of mortgage crises not even over. Part II up now, along with crashing COMMERCIAL real estate which will be trillions of $$. No stimulus or FED buying of toxic mortgages will help this time...the problem is WORLDWIDE! TOTAL ECONOMIC DIASTER on its way. Unemployment grows by 120,000 a month. GOLD rising because world currencies are crashing. GREAT DEPRESSION 2 is here and everyone will finally take notice. Check out this youtube video. http://www.youtube.comwatch?v=PB6hsfAIs8Y

October 27 2010 at 1:36 AM Report abuse +4 rate up rate down Reply
2 replies to mikfete58's comment
mikfete58

http://www.youtube.com/watch?v=PB6hsfAIs8Y

October 27 2010 at 1:41 AM Report abuse rate up rate down Reply
mikfete58

http://www.youtube.com/watch?v=PB6hsfAIs8Y

October 27 2010 at 1:41 AM Report abuse rate up rate down Reply
ultraz2

We were suppose to have HGOME LOAN MODIFICATIONS, INTREST & PRINCIPLE REDUCTIONS---WHAT A JOKE, I know because I applied for one. CLOSE DOWN THE TARP BANKS NOW.

October 26 2010 at 11:51 PM Report abuse +3 rate up rate down Reply
robertkrosky

Never should have gone this far.What was our government watching and getting paid at the same time?Most of our government does't care about us.They pass benefits to themselves but should have been watching out for us.The old saying that the fox is watching and guarding the hen house.Where do we go from here?

October 26 2010 at 9:41 PM Report abuse +3 rate up rate down Reply
Jen

Why a surprise. They have not been right on a single budget. go back to every estimate. Of course dumb ass liberals will have an excuse...had to be Bush's fault

October 26 2010 at 8:44 PM Report abuse +6 rate up rate down Reply
marine1942

Does this mean Obama is a failure ???

October 26 2010 at 8:20 PM Report abuse +7 rate up rate down Reply