The government’s $700 billion bailout of the foundering financial industry was successful in propping up the economy, but at the same time caused anger among Americans wary of so much government intervention with little accountability.

The appraisal by Neil Barofsky, Special Inspector General of the government’s Troubled Asset Relief Program was part of Barofsky’s 256-page quarterly report to Congress, released early Wednesday morning.

Barofsky said several actions contributed to the distrust of the massive bailout, including Treasury’s decision not to force the banks to report how the multi-billion-dollar rescue packages were spent, and its less-than-truthful statements concerning the first investments made with TARP money served to turn the public against the plan.

“Despite the aspects of TARP that could reasonably be viewed as a substantial success, Treasury’s actions in this regard have contributed to damage the credibility of the program and of the government itself, and the anger, cynicism and distrust created must be chalked up as one of the substantial, albeit unnecessary costs of TARP,” Barofsky wrote.

Among the other non-monetary costs of the rescue program is “moral hazard,” an economics term that describes a lack of incentive to reduce risk when there is protection against that risk. The massive infusion of government cash into the firms that caused the financial collapse and the modification of mortgages for consumers who borrowed irresponsibly both served to create moral hazard, Barofsky said, because there were few consequences to the risky behavior.

“Absent meaningful regulatory reform, TARP runs the risk of merely re-animating markets that had collapsed under the weight of reckless behavior,” he wrote.

In his accounting of the TARP to date, Barofsky said Treasury had paid out about $454.3 billion of the $699 billion allocated under the program. As of last month, 47 recipients had paid back a total of $72.9 billion, leaving $317.3 billion available.

Barofsky called it “extremely unlikely” that taxpayers will see the full return of all the TARP money. Some programs, including mortgage modifications, will yield no returns to the government. For others, Barofsky said, including billions in bailouts to American International Group and the auto makers, “full recovery is far from certain.”

Barofsky’s mixed review comes one week after he openly criticized the Treasury’s lack of oversight and due diligence before spending billions out bail out AIG.