U.S. regulators and the American public have become complacent toward the dangers of another financial crisis, leaving taxpayers at risk of another bailout, a top watchdog said Thursday.
"We are letting our guard down against things like moral hazard and 'too big to fail' banks," Christy Romero, the special inspector general for the financial-system bailout, said in an interview. "And that causes me great concern."
Romero's comments come ahead of her office's next quarterly report to Congress, the first since the Senate approved her appointment as Special Inspector General for the Troubled Asset Relief Program (TARP).
More than three years after the launch of TARP, the federal government still owns stakes in about 350 banks. While the biggest institutions have long since paid back their rescue funding, many smaller banks have been slow to exit the government program. In her report, the watchdog will take the Treasury Department to task for focusing too heavily on TARP repayments, a message Romero says is feeding into a sense that all is now well in the financial system.
The Treasury last week released a report saying taxpayers are likely to realize an overall profit from the suite of government rescue programs launched from 2008. The Treasury called the government's response to the financial crisis "well-designed and carefully managed," and said it prevented a collapse of the financial system while also helping the economy.
To read more on this story, see The Wall Street Journal article here.