Kohtz.org

"The government's response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned." - TARP Watchdog Neil Barofsky: Government Bailout Has Increased Risk Of Economic Crisis

Ok, so maybe the Treasury itself isn't admitting failure, but the person in charge of watching over the TARP program is. He sites multiple instances of corruption, and says the Treasury should "enact clearer walls" to try and stop it.

Treasury said it welcomed Barofsky's oversight but resisted the call to erect new barriers against conflicts of interest. The new rules "would be detrimental to the program," Treasury spokeswoman Meg Reilly said in a statement. The existing compliance rules "are a rigorous and effective method of protecting taxpayers," she said.

So the system can't work without there being corruption? Spoken like someone taking advantage of the system. Obviously they aren't rigorous enough. This is typical of government programs though.

Barofsky goes on to say,

"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.

He also makes the same argument that is indicative of any bailout, be it banks, the auto industry, or any business. Most call it a "moral hazard"...

Since Congress passed $700 billion financial bailout, the remaining institutions considered "too big to fail" have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them (emphasis mine) rather than bring down the financial system.

We need to let these companies fail, no matter what the consequence to our economy. If we don't, the consequences will become worse and worse until at some point - like all economies that inflate their currency - the entire economy will collapse.