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TARP's Big Bank Recipients Taking More Risks, Lending Less Than Non-TARP Banks, Report Finds

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Image from a quicklink The big banks that critics claim caused the financial crisis may have gotten bailed out, but they apparently haven't learned their lesson.

Large banks that got government bailouts through the Troubled Asset Relief Program (TARP) now are taking more risks than banks that didn't get taxpayer money, according to a working paper from the Federal Reserve.

The findings call into question one of the government's main justifications for TARP: that propping up large banks would stabilize a financial system at the brink and keep credit flowing. Instead, it seems that big banks that received the bailout funds -- many after pressure from government officials -- have been lending less than those that didn't get the money, according to the Fed. Furthermore, the loans that the bailed-out banks are making are riskier than those of their not-bailed out counterparts.

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