Dozens of TARP banks were "marginal institutions" that were financially weaker than other recipients and should have gotten more scrutiny before receiving taxpayer-funded infusions, the GAO said.
In a response to the GAO report, the Treasury Department said it would consider the GAO's recommendations to improve its funding process if it ever has a program similar to TARP again.
Treasury: "Yeah, if we're ever trying to throw something together in a week to prevent the complete collapse of the American economy again, we'll be SURE to look at your advice. HINDSIGHT SURE IS AWESOME INNIT." XD
TARP is one of many, many things that I will never know for sure if it was right or not. As this article noted, most of the funds loaned to banks under TARP have been repaid. From a lending standpoint, one expects a certain percentage of loans to go bad -- if a billion of the two hundred billion that was lent to banks isn't ever repaid, that's doing pretty well (and would be covered by the interest earned on repaid loans.)
But the two important questions that can't ever be answered are: Was it necessary? and How much will the knowledge that banks got bailed out once contribute to the likelihood that they will need to be bailed out again in the future?
I'm sure there are and will be very sophisticated models that purport to answer those questions, made by very smart sincere people who nonetheless come to wildly different conclusions.
I am inclined to think that TARP, for all its faults, was better than many of the alternatives, including "do nothing." But I don't know that, and I doubt I ever will.