Are We Turning a Profit on TARP?

For the banks, for the government, for taxpayers and for their precious debt-burdened children, this is some welcome good news: TARP could turn a profit. This article in the New York Times (see graph below) spots a 15% profit from eight of the big banks that have repaid their TARP funds. Somewhere in the Hamptons, Hank Paulson is gleefully scribbling a footnote to his memoirs.


I'm with Yglesias. TARP might not have been perfect, but it provided clutch funds for teetering banks during the darkest hours of the recession, and its early returns are positive. Not bad for a ongoing government working through the most complicated financial crisis we've ever seen. Here's the key graph:

tarpprofit.png
And here's the most important observation of the piece: The government is still a long way from recovery from its historic bailout of the financial and mortgage industries:

The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

Here's what I still find incredible. In twenty years, we'll likely look back on Obama's first term and praise or criticize him for a swift or stalled recovery. But what's amazing is that some of the most important and lasting decisions were made in the waning months of a lame duck presidency. TARP was a Paulson/Bernanke brainchild. The AIG bailout was a Paulson/Bernanke production. The takeover of Fannie and Freddie was in September 2008. The first-round auto bailouts were one of Bush's final contributions. When history's verdict on the recovery plans emerges, it focus on two months -- September and October -- during which time the public was arguably more focused on a campaign. Pretty amazing.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

The Blacksmith: A Short Film About Art Forged From Metal

"I'm exploiting the maximum of what you can ask a piece of metal to do."

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

An Ingenious 360-Degree Time-Lapse

Watch the world become a cartoonishly small playground

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

Video

The Rise of the Cat Tattoo

How a Brooklyn tattoo artist popularized the "cattoo"

More in Business

Just In