TARP Created 'Too Big To Fail' Moral Hazard: Watchdog

Law360, New York (March 16, 2011, 7:43 PM EDT) -- The Troubled Asset Relief Program may have distorted the financial marketplace by convincing some banks they are “too big to fail,” the congressional watchdog overseeing TARP said Wednesday in its final report.

The billions of dollars TARP doled out to large financial intuitions has artificially inflated their credit ratings and made them more likely to take risks, since they have an implicit government guarantee, the TARP Congressional Oversight Panel said.

The panel, created by the same legislation as TARP, delivered its final verdict on the program...
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