WASHINGTON (CNN) â?? The banking system today may be in a more precarious position than it was a year ago, the man charged with overseeing a $700 billion bailout program said Wednesday.
Neil Barofsky, the special inspector general managing the Troubled Asset Relief Program, told CNN’s Wolf Blitzer on Wednesday that the government’s decision to support bank mergers over the past year may have put the U.S. economy more at risk.
“These banks that were too big to fail are now bigger,” Barofsky said. "Government has sponsored and supported several mergers that made them larger and that guarantee, that implicit guarantee of moral hazard, the idea that the government is not going to let these banks fail, which was implicit a year ago, is now explicit, we’ve said it. So if anything, not only have there not been any meaningful regulatory reform to make it less likely, in a lot of ways, the government has made such problems more likely.
“Potentially we could be in more danger now than we were a year ago,” he added.
Earlier in the day, Barofsky issued a scathing report criticizing the Treasury Department for not being transparent enough about how bailout money was being spent. He warned that this could have lasting effects.
“I think this cynicism, this anger, this distrust of government that’s born in part from a lack of transparency could have far-reaching ramifications, whether there’s a next crisis or when anytime the government is going to call on the American people, the taxpayer, to support necessary programs,” Barofsky said.