Nov. 13 (Bloomberg) -- The U.S. government's $700 billion Troubled Asset Relief Program is a ``sugar boost'' that won't solve the financial industry's problems, Toronto-Dominion Bank Chief Executive Officer Edmund Clark said.

``TARP is like getting a temporary sugar boost,'' Clark said yesterday in an interview in New York. ``There's no question that it postponed the adjustment process.''

Canada's second-biggest bank, which operates more than 1,100 branches in the U.S., isn't eligible for the aid program because it's a foreign-based lender. Clark said the bailouts may only buy time for troubled U.S. banks.

In three years, the U.S. will ``have discovered the government didn't socialize losses, it just allowed the institution to have a longer life, hoping that things would get better.''

Toronto-Dominion is the only large Canadian bank to have avoided debt writedowns in the financial crisis after shedding a structured products business in 2005, which included collateralized debt obligations.

Clark, 61, said he would consider additional acquisitions in the U.S. that don't involve ``significant'' asset risk, after spending more than $15 billion over the past four years on companies including Portland, Maine-based TD Banknorth and Cherry Hill, New Jersey-based Commerce Bancorp Inc.

``If we could find a bank that's in our space that we could buy for less than what it would cost to build new branches there, and doesn't involve significant asset risk, then we're interested,'' Clark said.

Doesn't Need Acquisitions

Clark said Toronto-Dominion doesn't need acquisitions to grow, and can increase its network of U.S. branches by opening new outlets on the east coast.

``They don't need to act immediately,'' said John Aiken, an analyst at Dundee Securities Corp. in Toronto. ``The longer TD is able to wait, presumably the better the pricing becomes.''

Toronto-Dominion, North America's seventh-largest bank by assets, may also consider Florida for expansion, Clark said.

``I look at Florida and say `no one wiped out the deposit base in Florida, what they wiped out was the asset base,''' Clark said. ``If you can get in there and build new branches and gather up deposits, that's a tremendous place to be.''

Canada's five other main banks by assets have written down C$11.6 billon ($9.4 billion) since the third quarter of 2007. Banks worldwide have recorded $704.6 billion in writedowns and credit losses since last year, according to Bloomberg data.

Terrified Consumers

Clark also said the financial crisis has ``terrified'' U.S. consumers, and said he expects a sharp economic downturn.

``We've terrified the consumer, we've caused the equity in their house to disappear, and we've now added on investment losses to that,'' Clark said. ``You've got to think the U.S. consumer's going to go on strike until they feel better.''

The U.S. slowdown is spreading to Canada, making a recession ``inevitable,'' Clark told investors in New York yesterday. He said he welcomes moves by the Canadian government to buy back as much as C$75 billion in mortgages from banks to give them more money to lend.

``It's not aid,'' he said in the interview. ``The Canadian government has never had to help out the Canadian banks. I think generally if you can stay on that side of the ledger, that's a better place to be.''

Toronto-Dominion rose C$1.63, or 3.1 percent, to C$54.58 in 4:16 p.m. trading on the Toronto Stock Exchange. The stock has fallen 21 percent this year, compared with an 18 percent decline in the nine-member S&P/TSX Banks Index.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

Last Updated: November 13, 2008 16:29 EST