This is the Cato Daily Podcast for Monday, May 4th, 2009.

I'm Caleb Brown.

Has the Troubled Asset Relief Program TARP been a success thus far,

as it calmed credit markets and on the cusp of the release of

stress test results from banks around the United States how much money is left in the

program Mark Calabria director of financial services policy at the Cato

Institute, comments.

Well, and I think that's a good place to start is with the name of it. I mean, the TA is troubled assets and as of yet not a troubled asset has been bought.

So the initial proposal was shelved almost as much as the almost at the time the bill was signed.

So the first immediate action was to capital injection.

So from day one there was what you call a legislative bait and switch between this is what we're going to do with the program

between what actually got implemented. So to focus on the weather, even the purposes of the

Act have been met, they clearly haven't, but you want to focus on, well, okay, let's say you did put the capital in there.

Has that even achieved what the act was supposed to do, which was to one bring stability and to

increase liquidity so that they'd be lending again?

Because the ultimate objective was we were going to remove these troubled assets because banks are too worried about lending.

You know, they have to write down the assets, they have to write down their capital so they have no capital so that they can't lend,

and therefore, you know, economic activity stops because people can't borrow.

And that was the chain of reasoning that was behind it.

So then Secretary, Treasury Secretary Paulson took the approach of, well, we're going to inject capital in there.

And that way, you know, we won't worry as much about trying to value these assets because there was always

consistently a problem of,

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