The capital investment in banks begun last year by government was a mistake and created a "horrible public outcry" directed at the industry, Sheila Bair said Friday.
The Federal Deposit Insurance Corp. chairman said in a TV interview she regrets not having done more to stop the move. She noted that the Troubled Asset Relief Program was first meant to purge toxic loans but that this idea was scrapped in favor of capital infusions.
"We would have tried to dissuade Treasury from making these Tarp capital investments," she said on PBS' NewsHour, according to advance excerpts released by the show.
Bair did not fault officials for the decision, noting the "urgency" of last year's turmoil, but said the plan backfired with the public's protests and other fallout.
"At the time it sounded like the right thing to do. It was part of an international effort. But I just see all the problems it's created now. … It's had a terrible, terrible impact on public attitudes toward the financial system, toward the regulatory community, and it's created all sorts of issues about government ownership of these institutions."
