Time to End the TARP Bailout Program

(By Stuart M. Butler, Ph.D.; The Heritage Foundation) - Last week the Bush Administration tried to find ways to use the funds available in the Troubled Assets Relief Program (TARP) to bail out the Detroit automobile companies. That decision is just the latest of weekly, and sometimes daily, Administration reinterpretations of the TARP program's purposes. And no doubt the incoming Administration will continue this creativity and TARP will increasingly become a White House fund for politically sensitive companies.

With $15 billion of TARP funds still immediately available, and another $350 billion available if congressional action does not block access to the money, it is time to end this program by canceling further Treasury authority to allocate funds. To the extent that new financial crises materialize, recent experience suggests that the Federal Reserve Board is best able to handle them and would do so while resisting political pressure. If additional steps are needed in the future, the White House should request new congressional programs or authority with far greater clarity and restrictions on the uses of money. It is time to end the continued use and abuse of TARP funds.