I agree with Joshua Green, awkward though going against the prevailing "wisdom" is. TARP helped. It didn't help everyone and that's an important consideration. But there are good reasons to believe it helped make things better, and not just for the banks. The last thing we needed, as the system crashed around us, was a "principled" do-nothing stand against Wall Street.
TARP was brought into play at a time when we were risking a huge economic disaster along with banks falling over like dominoes right across the world. TARP is unpopular because the tea party says it's bad. But we talking about a group that thrives on nuttiness and fantasy. Ironically, it's funded by libertarians and libertines with close ties to big money. Go figure.
All the big Wall Street banks have fully repaid the government with interest. To date, taxpayers' profit from these banks stands at around $26 billion. Small banks still hold about $20 billion from TARP, but this, too, is likely to be repaid with a profit. The government also invested $50 billion in GM, which the automaker will begin repaying after its initial public offering in November.
Not every TARP program over-performed. The $50 billion mortgage-modification effort -- money never expected to come back -- mostly failed. But even this has proved perversely economical, since the program won't draw its full allotment.
The Congressional Budget Office recently lowered its estimate of what TARP will cost taxpayers to $66 billion. With interest, dividends, anticipated profits, and the unexpectedly small commitment to housing -- not all reflected in the CBO's conservative estimate -- it is possible to envision an outcome in which TARP costs little or nothing.
That's good news for taxpayers -- but they probably won't learn about this surprising bipartisan achievement from elected officials, who long ago judged any association with TARP as deadly.
Testifying before Congress last week, Treasury Secretary Tim Geithner gently tweaked lawmakers for flip-flopping. "A lot of people who voted for TARP decided later that they had to distance themselves from that vote by disparaging the program,'' he said. "But I think they should be proud of the votes they cast. They were on right side of history.'' Politically that sounds nuts, but the numbers back it up.
Economists will tell you that's not the whole story, that there are "troubled assets" out there that are bound to make big trouble for banks and all of us.
But that's a problem we've allowed to continue. We have accepted "too big to fail." You haven't, and I haven't. But the political system has accepted it, and the rest of us seem to be lying down in front of that bulldozer. Why are so many targeting TARP when the real target should be watered down regulations?
For the time being, the corrupt old system is up and running, at least "trickle down" is likely to resume, we are edging our way out of a de-recession and (if we ever get our political act together) we can change things so we never have to throw a TARP over our collective sins again.
ProPublica has a different view of TARP.