MercoPress. South Atlantic News Agency

US government exposure to financial crisis could reach 23.7 trillion USD

Neil Barofsky, head of the TARP program

The total exposure of the US government to the financial crisis could reach 23.7 trillion US dollars, according to a watchdog report. Neil Barofsky, overseeing the Troubled Asset Relief Programme (Tarp), made the estimate in prepared remarks to a House of Representatives committee. The US GDP for 2008 was estimated in 14.3 trillion US dollars.

The worst-case estimate represents the maximum exposure if all parties offered support requested maximum assistance. The figure includes all government and Federal Reserve initiatives.

“From programmes involving large capital infusions into hundreds of financial institutions, to a mortgage modification programme, to public-private partnerships using tens of billions of taxpayer dollars to purchase “toxic” assets from banks, Tarp has evolved into a programme of unprecedented scope, scale and complexity,” said Mr Barofsky, special inspector general of Tarp.

However, he said the programme was only part of the wider effort to rescue the US economy.

“As massive and important as Tarp is on its own, it is just one part of a much broader federal government effort to stabilise and support the financial system.

”The total potential federal government support could reach 23.7 billion“ he added.

Mr Barofsky said any judgement on the effectiveness of Tarp should be made in the context of the government's overall efforts to revive the economy.

He also criticised the government for ”repeatedly” failing to adopt recommendations from his office regarding transparency.