Taxpayers Risked Trillions At Height Of Crisis

DANIEL WAGNER

WASHINGTON (AP) — Government officials put trillions of taxpayer dollars on the line to guarantee risky bank assets — a strategy that could cause permanent and costly market distortions, a government watchdog says.

At the peak of the financial crisis, taxpayer money guaranteed assets worth $4.3 trillion to help banks ride out the panic. The programs, which essentially provided insurance against losses, helped stabilize financial markets but put far more taxpayer dollars at risk than Congress intended, according to the Congressional Oversight Panel.

The report, released Friday, says the guarantee programs became the single largest part of the government's effort to calm the markets. And even though many of the programs have now expired, the guarantees still provide invisible government subsidies even to healthy banks, according to the report.

The panel makes periodic assessments of how Treasury is managing the $700 billion financial bailout Congress approved last year.

Guarantees "put more power in the hands" of Treasury and the Federal Deposit Insurance Corp. because "they're not limited by the number of dollars Congress will authorize," panel chairwoman Elizabeth Warren said in a call with reporters.