Another fine mess on the way?
Treasury Secretary Timothy Geithner warned that the U.S. government may have to take control of major financial institutions again if there’s a crisis as big as the last one, according to a report released Thursday by a group overseeing the Troubled Asset Relief Program.
“We may have to do exceptional things again if we face a shock that large,” Geithner told the Office of the Special Inspector General for TARP in December.
SIGTARP commended Geithner for his candor, but the group also said the Treasury secretary’s comments highlight that TARP has left a legacy of “moral hazard associated with the continued existence of institutions that. remain ‘too big to fail.’”
“It also serves as a reminder that the ultimate cost of bailing out Citigroup and the other ‘too big to fail’ institutions will remain unknown until the next financial crisis occurs,” SIGTARP added in its report.