Treasury lauds bank bailout, warns on housing

WASHINGTON (Reuters) - A senior U.S. Treasury Department official said on Thursday the crisis-driven bank bailout in 2009 had been remarkably effective and urged Congress not to end a controversial mortgage help program too early.

In testimony to the Senate Banking Committee, Acting Treasury Assistant Secretary Timothy Massad said the Troubled Asset Relief Program, or TARP, "helped pave the way for an economic recovery" and at a fraction of the cost once feared.

But he said housing markets remain weak and said it would be a mistake to end a home mortgage modification program as Congress is considering doing because that might further destabilize queasy markets.

"We acknowledge that our housing programs have not been without criticism, and that housing is an area where there is still much work to be done," Massad conceded. But he insisted the Home Affordable Modification Program, or HAMP, had been unfairly criticized because it couldn't save everyone from foreclosure.

"It is important to remember that the program was not intended to prevent all foreclosures," he said, adding that there currently were about five million delinquent mortgages.

Congressional Republicans want to end HAMP and are pushing ahead with proposals to do so in a bid to tap into voter anger at bailouts for banks and other big institutions.

"We strongly oppose any efforts to end our necessary housing programs," Massad said. "Ending these programs would further destabilize an already weak housing market."

(Reporting by Glenn Somerville)