A government official is preparing to tell lawmakers that the recent overhaul of financial rules hasn’t delivered on its promise to end future bailouts.

Special Inspector General Neil Barofsky, who provides independent oversight of the $700 billion bailout fund created in 2008, is due to testify Wednesday at a hearing of the House Committee on Oversight and Government Reform.

Barofsky says in a report released Tuesday that recent comments by Treasury Secretary Timothy Geithner and other top regulators suggest the government would rescue banks if one of them threatened the broader financial system.

Geithner said in an interview with Barofsky last month that despite the tools included in the sweeping financial law, "we may have to do exceptional things again" to prevent a crisis similar to the one that peaked in 2008.

"His acknowledgment serves as an important reminder that (the bailout's) price tag goes far beyond dollars and cents, and that the ultimate cost . . . will remain unknown until the next financial crisis occurs," Barofsky says in the quarterly report to Congress.

He says in the report that the prospects for recouping taxpayer money "are today far better than anyone could have dared to hope just two years ago." He says the Treasury Department is likely to recoup most of the $160 billion of bailout money that remains in private hands.

But Barofsky notes that the bailout solidified the view among investors and bankers that the government will continue to save banks whose failures threaten to upend the financial system. The handful of largest banks got bigger during the crisis by absorbing weaker rivals. A single failure now would cause even more damage, Barofsky says.

The Obama administration touted its overhaul of financial rules as a prescription to end future financial bailouts. The law gives regulators the ability to police any financial company whose failure would be felt throughout the system, and to shutter institutions that pose a threat.

Bank regulators acknowledge that those tools might not be enough to avoid a bailout, Barofsky notes. He says the law depends heavily on decisions by many of the same regulators who failed to prevent the recent crisis.

Federal Deposit Insurance Corp. Chairman Sheila Bair has argued that the law will only prevent future bailouts if regulators force changes that would make big, complex banks easier to unwind.

Federal Reserve Chairman Ben Bernanke said last year that even the public perception of a government guarantee for big banks would encourage the excessive risk-taking on Wall Street that inflated the housing bubble.

Investors appear to believe the banks still enjoy government backing. Analysts with Standard & Poor's now factor in the expected government support when assessing the credit of big banks.

Treasury's top official managing the bailout fund said the overhaul law gives officials "a much wider range of tools" to address crises without creating another ad hoc bailout program.

"It gives us tools we didn't have, it's still being implemented and I believe, as the report acknowledges, that it remains to be seen how this is done, and therefore we can't pass judgment on any of that today," said Treasury acting Assistant Secretary for Financial Stability Tim Massad.

Barofsky's report also blasts Treasury's efforts to help at-risk homeowners avoid foreclosure. He says Treasury has constantly shifted the criteria for success and refused to get tough with mortgage companies that have dragged their feet and excluded qualified homeowners. He says that makes meaningful oversight of the program nearly impossible.

The main foreclosure program's "achievements look remarkably modest, and hope that this program can ever meet its original expectations is slipping away," Barofsky says.

The report also includes fresh data on efforts by Barofsky's office to investigate possible fraud involving bailout money. Its work has led to civil or criminal fraud charges against 45 people, resulting in 13 criminal convictions, the report says. It says the office is pursuing 142 ongoing investigations, including 64 into executives of banks that applied for bailout money.