Politics TARP worked - and may actually earn U.S. a profit 6453 posts Posted by Suzy100 on Oct 04, 2010 at 02:15 PM
Looks like TARP worked, and its cost will be far less than once thought: A final accounting of the governments full range of interventions in the economy, including the bailouts of the mortgage finance giants Fannie Mae and Freddie Mac, is years off and will most likely remain controversial and potentially costly.
But the once-unthinkable possibility that the $700 billion Troubled Asset Relief Program could end up costing far less, or even nothing, became more likely on Thursday with the news that the government had negotiated a plan with the American International Group to begin repaying taxpayers.
Full article: http://www.nytimes.com/2010/10/01/business/01tarp.html
More:
This is the best federal program of any real size to be despised by the public like this, said Douglas J. Elliott, a former investment banker now associated with the Brookings Institution, a Washington think tank.
It was probably the only effective method available to us to keep from having a financial meltdown much worse than we actually had. Had that happened, unemployment would be substantially higher than it is now, the deficit would have gone up even more than it has, Mr. Elliott added. But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.
And a Republican's thoughts on this:
Senator Robert F. Bennett of Utah was Bailout Bob to Republicans who refused to re-nominate him for a fourth term.
For those who were screaming at me and screaming was the operative word Youve just saddled our children and grandchildren with $700 billion, I said, No, I havent, Mr. Bennett said in an interview.
My career is over, he added. But I do hope that we can get the word out that TARP, number one, did save the world from a financial meltdown and, number two, did so in a manner that, I believe, wont cost the taxpayer anything. And even if it did not all get paid back, it was still the thing to do.
Reality vs. perception - TARP, rescue plans worked Published 10/05/2010 12:00 AMUpdated 10/05/2010 02:03 AM0 0 COMMENTS ( 14 ) It appears a couple of the biggest assumptions on which much of the anti-incumbent fervor is based - manifested most dramatically in the tea-party movement - are false.
The first big assumption is that the Troubled Asset Relief Program (TARP) and other government-financed rescue efforts created massive debt while failing to help the economy. Analytical assessments, however, now show that TARP, which officially ended Sunday, will end up costing the nation comparatively little, perhaps nothing. Combined with other rescue programs, it helped avoid a far more serious economic calamity.
The second big argument is that if the Republicans back up their pandering tea-party rhetoric and begin slashing government spending and reducing deficits after November it will get this economy turned around. Not so, says the International Monetary Fund, a group that no one will ever confuse with a liberal think tank. It warns that if the United States joins European nations in a rush to reduce budget deficits, the likely result will be less economic growth and higher unemployment, at least in the short term.
Despite this evidence, don't expect any Democrats to go out on the campaign trail and brag about the bailouts. And Republican incumbents - such as Sen. Robert Bennett of Utah, Sen. Lisa Murkowski of Alaska and Mike Castle - dragged down in primaries in large part because they supported TARP - will not get a second chance.
Connecticut 2nd District Rep. Joe Courtney, a Democrat, takes great pride in his opposition to TARP, featuring that fact in a recent campaign commercial. TARP remains a bad word. Back in 2008 these editorial pages shared Rep. Courtney's deep concerns about the bailout and applauded his political courage. It was rushed legislation, unprecedented in size, lacking safeguards and without supportive data. Henry Paulson, treasury secretary in the President George W. Bush administration, has admitted his staff pulled the requested number - $700 billion - from thin air.
But it worked.
The White House now projects TARP will lose at most $50 billion, less than 1 percent of economic output. It could end up breaking even or make money, depending on how investments in the American International Group Inc. and General Motors fare. Treasury ended up dispersing $387 billion of the $700 billion limit, preserving the banking and domestic car industries in the process.
Meanwhile, the most comprehensive analysis of the government's response to the fiscal crisis - the Bush TARP program, the bank stress tests, the $787 billion stimulus bill and auto industry rescue pushed by President Obama - concludes these actions likely prevented a depression.
Economists Alan Blinder, a former Federal Reserve vice chairman and a Princeton University professor, and Mark Zandi, chief economist at Moody's Analytic Inc., determined that without those measures the gross domestic product would have plunged 7.4 percent in 2009, not 2.4 percent, and would have resulted in 16.6 million job losses, twice the actual number.
But voters are more likely to be moved by what did happen - huge bailout programs and persistent unemployment at near 10 percent - than what did not happen, a depression. Such is the politics of perception.
The nation, however, could suffer if the wrong lessons are learned. A rash curtailing in spending to cut the deficit could stall the recovery. Prudent steps to reduce the costs of entitlement spending over the long term are the more worthwhile approach.
Of greater concern is that Congress will be unwilling politically to react to some future financial emergency, setting the stage for a more devastating economic crisis. Such is the price of policies dictated by political expediency rather than analytical reasoning
PowerStroker wrote: The White House now projects TARP will lose at most $50 billion, less than 1 percent of economic output. It could end up breaking even or make money, depending on how investments in the American International Group Inc. and General Motors fare.
I am glad that Bush's idea worked out for the Obama Administration, of course un-employment is still at or above 10% and in some areas even worse. Let us not forget that real-estate is in the toilet, and the only reason it's not falling fast is because the government is keeping non-paying home owners in their homes to prevent a sudden saturation of the market. Many of these people will still lose their homes, but it will be a slower process with the banks intrest in mind, not the sheeples.
And then there is the fact that $50 billion dollars is a lot of money, and all of this stuff looks good on paper, however the actual dollar amount as of RIGHT NOW that has been paid back is what PowerStroker?
I know we are going into election season, so I get all sorts of sensational claims mailed to me and I also get a good fill of them in the form of online advertisements.
So Obama is two years into his Presidency, has spent his $700 Billion dollar wadd that Bush pushed thru and is now telling us everything is okay IF they pay us back. Sorry bud, but many are waiting to see.
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What is to give light must endure burning -- Viktor Frankl
Only half of the 700 Billion was ever distributed, most of which when Bush was still in office. I'm glad they did it because it worked. I've got to give credit where credit is due. Bush did a lot of horrible and damaging things to our country, but TARP was a good thing that he did. Though it wouldn't have been necessary had his other policies of deregulation not sucked so badly.
