TARP chief steps down as disputed program nears its end

WASHINGTON —The head of the government's $700-billion bailout fund announced his resignation Wednesday as the much-maligned program heads toward its formal end early next month.

Herb Allison, the assistant treasury secretary for financial stability, took over running the Troubled Asset Relief Program in early 2009. The fund was hastily set up by Congress in October 2008 to try to address the fast-moving financial crisis.

On Wednesday, Allison and Treasury Secretary Timothy Geithner strongly defended TARP, saying that despite its deep unpopularity, it was crucial to keeping the crisis from turning into another Great Depression.

"The TARP program has proven remarkably successful in achieving its goal of stabilizing the financial sector and laying the foundation for our nation's economic recovery — at a fraction of the cost that was originally anticipated," Allison wrote in a letter to the staff of the Office of Financial Stability.

The program will formally end Oct. 3, the two-year anniversary of its enactment. After initial concerns that most if not all of the $700 billion in taxpayer money would never be recovered, the most recent cost estimate by the nonpartisan Congressional Budget Office estimates that TARP will lose $66 billion.

"We are going to largely get the taxpayers' money back," Geithner told about 150 people involved in running the TARP program Wednesday morning at the Treasury Department, where he congratulated Allison for his service.

"Now, TARP was not perfect, but I strongly believe by almost any measure it has succeeded in a way no one ever imagined," Geithner said, adding that there is still a lot of work to do to repair the economy.

A recent report by economists Mark Zandi and Alan Blinder declared TARP "a substantial success, helping to restore stability to the financial system and to end the free-fall in housing and auto markets."

TARP was approved by Congress with broad bipartisan support, although most lawmakers voted for it reluctantly in the face of predictions of dire consequences by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke. The program was originally designed to purchase toxic mortgage-backed securities from banks, but Paulson quickly changed course in the fall of 2008 and used a large chunk of the money to inject capital directly into banks to prevent their failure and to try to get credit flowing.

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