Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Timothy F. Geithner said the $700 billion financial rescue enacted in 2008 continued to help the U.S. economy in the third quarter of this year, in a report today signed by five U.S. agency heads.
The Troubled Asset Relief Program, which was scaled back this year and can no longer be used for new programs, contributed to healthier financial conditions in the quarter ended Sept. 30, the report said. TARP was used to shore up U.S. banks, help the auto industry and assist homeowners facing foreclosure during the financial crisis.
“The accumulated effects of Treasury’s actions under TARP continued to contribute significantly and positively to conditions in many financial markets during the quarter,” the report said. “The adverse effects of Europe’s financial turmoil during the spring on U.S. markets receded during the quarter and financial markets returned to conditions consistent with a gradual path toward recovery.”
TARP also aided the housing market, the report said, adding that it is too early to predict default rates for mortgages that have been refinanced under government modification programs. There are “tentative indications” that default rates may decline for Federal Housing Administration mortgages, the report said.
The report was published by the Financial Stability Oversight Board, which includes Geithner, Bernanke, Securities and Exchange Commission Chairman Mary Schapiro, Housing and Urban Development Secretary Shaun Donovan and Edward J. Demarco, acting director of the Federal Housing Finance Agency.
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