WASHINGTON (AP) – A government watchdog said the $700 billion bailout for the financial industry played a major role in rescuing the economy over the last year but also engendered anger and distrust among Americans because of secrecy and confusion about the way the program was handled.

The mixed and blunt assessment by Neil Barofsky, the special inspector general in charge of oversight for the bailout fund, comes just as the administration is taking steps to wind down and refocus the Wall Street rescue effort. Barofsky's conclusions are in a quarterly report scheduled for release Wednesday.

An administration official said Tuesday that the bailout effort's signature initiative - a capital purchase program that aimed to inject $218 billion into banks - would effectively wrap up at the end of the year.

But even as the administration aimed to refocus the massive Troubled Asset Relief Program on small businesses and homeowners, Barofsky said the effort to save the nation's financial sector cam at great cost to taxpayers, to the integrity of the financial system and to the public's perception of the federal government.

"Despite the aspects of TARP that could reasonably be viewed as a substantial success,'' he wrote, "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 said public suspicion was fed by Treasury's decision not to require banks to report how they used their rescue money and its "less-than-accurate'' statements describing the financial condition of nine large banks that benefited from large infusions of aid. The TARP program began under the administration of President George W. Bush and has expanded under President Barack Obama.

The administration official, speaking on the condition of anonymity because the details had not yet been made public, said the Treasury Department plans to cap two TARP programs at levels below initial projections. A program designed to rid big banks of their bad assets will spend $30 billion instead of $75 billion. Another that supports a Federal Reserve effort to ease bank credit will top off at $30 billion instead of $80 billion. A new initiative aimed at banks - the Capital Assistance Program - had no applicants and will also end, the official said.

The overall TARP program has come under criticism in Congress from across the political spectrum. Liberals maintain the program needs to shift its focus from big financial firms to small businesses and homeowners. Conservatives insist the program has been an unnecessary intrusion into the financial sector and should end swiftly.

On Wednesday, Obama is expected to announce a new TARP program to assist community banks. The American Bankers' Association has asked for $5 billion in rescue-fund money to help small banks extend more loans.