TARP Won't Cost Much, but Taxpayers Still Hate It

Examining the "disconnect" between the popular narrative, and the bailout's success

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Two years after Lehman Brothers' collapse, debating whether TARP—the bailout—has been unfairly criticized remains a vital topic of debate. On Thursday, a new New York Times story came out, reporting the much-hated Troubled Asset Relief Program may wind up costing far less than "once anticipated." In fact, the $700 billion shelled out in bailouts and other measures might even be paid back completely, in some cases with interest. The question, though, is how that will affect the popular narrative of TARP being a colossal waste.

  • Time for a Dose of Reality  "The government obviously took a range of actions and spent a lot of money around the financial crisis," writes Politico's Ben Smith. "But it is increasingly hard to argue that TARP should be seen--as it still is--as some kind of original fiscal sin."

  • 'There's a Disconnect,' says Businessweek's Rebecca Christie, "between the political rhetoric and the facts on the ground." She also points out, among the money repaid, the remaining "three main sources of red ink: giant insurer American International Group (AIG), the auto industry, and assistance to homeowners." On the other hand, "the [Treasury] department earned a 14 percent return on the $10 billion it gave to Goldman Sachs, and a 13 percent return on its $10 billion to Morgan Stanley." That's a "tidy profit."
  • The People TARP Actually Hurt  They weren't the "taxpayers after all," comments New York Magazine's Dan Amira, but "the Republicans who were voted out of office because of their support for a program that earned the misplaced hatred of the tea party."
  • 'Doesn't Bode Well for the Long-Term Health of Political Discourse,' worries David Gibson, writing at Commonweal magazine, commenting on the gap between TARP's apparent success and its stunning unpopularity.
  • Why People Hate TARP  It's "in part," says Think Progress's Matt Yglesias, "because the public sphere has utterly failed to defend it."
  • A Caveat or Two  Jeremy Hobson of Marketplace interviews Kenneth Troske, "a University of Kentucky economist who sits on the congressional panel that oversees TARP." Troske says only a "very narrow view of TARP" allows one to say that most of the money was made back: "a lot of the cost of TARP were shifted to other programs that have received much less attention and much less government oversight." He also points out , in Hobson's words, that TARP "did save our banking system," making it troubling that its current unpopularity will likely prohibit a similar program from being enacted in the event of a future crisis (which he thinks will, in fact, come).
This article is from the archive of our partner The Wire.