Quiet as it’s kept, the bank bail-out worked
Admittedly, the bank bail-out was a complicated and messy issue, not easily explained in bumper-sticker slogans. To the average American (including me), it did often seem as if the taxpayers were stuck with the tab for a huge Wall Street party that got out of control.
But the bail-out of financial institutions — officially known as the Troubled Assets Relief Program (TARP) — was absolutely necessary to avert a second Great Depression. If the banks and other financial institutions had been allowed to go over the cliff, they would have taken the rest of the economy with them.
And the bail-out was successful. It not only saved the economy from complete collapse, but it will end up costing the taxpayers less than initially predicted.
“TARP has turned out to be much cheaper than we had expected, although not cheap,” Obama told reporters Monday. “It means that some of that money can be devoted to deficit reduction. And the question is: Are there selective approaches that are consistent with the original goals of TARP — for example, making sure that small businesses are still getting lending — that would be appropriate in accelerating job growth?”
Administration officials said they are slashing their estimate of the losses from TARP by about $200 billion. The White House had projected in August that the massive program would lose about $341 billion over the next 10 years. But officials scaled back the estimate after once-shaky Wall Street firms began recovering much more quickly than expected. In addition, several TARP initiatives have been funded with smaller amounts than originally planned.
No one who participated in the bailout or voted for it — and that includes Hank Paulson and the Treasury assistant who ran the program, Neel Kashkari — will ever get the credit they deserve for taking drastic steps to salvage the economy. But they did the right thing.
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Guides
Visitor Agreement | Privacy Statement
© 2011 The Atlanta Journal-Constitution
73 comments Add your comment
disappointed
December 8th, 2009
8:42 am
GET REAL…IT JUST HAS NOT WORKED FOR MOST AMERICANS LOSING JOBS, HOMES, SANITY!
StJ
December 8th, 2009
9:20 am
It has kept us from going “over the cliff” in the short term. I wouldn’t necessarily call that success, however. There is still more fallout from the meltdown yet to come.
Success comes when the corporations who were given the money actually pay it back in full.
LeeH1
December 8th, 2009
9:27 am
The worst thing was the banks were so big that they were able to threaten our national economy with their own self-interest. Now the banks are getting back to normal, it is time to take out the trust busting axe and chop them into little pieces, so private enterprise and greed by a few bankers will no longer make national policy, or ever threaten our nation again.
Ben
December 8th, 2009
9:35 am
Neither you nor anyone else on Earth can prove in any way that this prevented a massive economic failure. The one thing we absolutely know is that banks that made really bad business decisions got bailed out, while banks that made good business decisions were put in a serious competitive disadvantage since they didn’t get billions of dollars of free money.
Pretty much every “accomplishment” Obama has made is something that easily could have turn out far better had he not done it, but he tends to stick with accomplishments where the opposite cannot be proven.
We know one thing, the unemployment rate is a good but higher than Obama estimated it would be if did NOT pass the stimulus. Yet they still call it a success.
Joan
December 8th, 2009
9:36 am
I would love to actually have facts instead of hyperbole. Kept banks “from going over the cliff”. Of course now the administration is looking for other ways to spend the same money. It would never occur to Congress to pay down the huge national debt with it.
Peadawg
December 8th, 2009
9:36 am
Just curious, Cynthia…are you saying Obama’s bailout worked or Bush bailout worked, or both? And please answer honestly.
Sunshine and Thunder
December 8th, 2009
9:47 am
TARP didn’t have as much to do with it as did the Federal Reserve which expanded its balance sheet by 1.5 trillion pouring liquidity into the banking system and also by buying mortgages from investors. But it was also the Federal Reserve which laid the groundwork for the bubble to exist in the first place. We now know that you can’t let the air out of a bubble slowly. It must go POP!
Chris Broe
December 8th, 2009
9:51 am
“But they did the right thing.”
It’s nice when good people do the right thing! Glenn Beck disagrees with you, Cynthia Tucker! He squints his eyes and shakes his head and mugs that emoticon look of disbelieve whenever he talks about TARP.
Now Bill Oreilly is doing the Glenn Beck squint, and mimicking the head shake of disbelief too. Even guests on Oreilly’s show are doing that exact same thing with their faces.
Glenn and Bill may be correct, I’m not a pundit, but they both are certainly entertaining. The contagious nature of mugging is very funny, and has been the backbone of hollywood’s greatest humor. Laurel and Hardy. Who hasn’t done the Stan Laurel simpleton face/head scratch? Moe. Who hasn’t done the Moe frown/lip-grimmace thing? Of course we stopped doing it sometime in elementary school, but we all did it. That Glenn and Bill are making money doing the same doesn’t make it any less funny. Check it out. Even their female guests are doing it!!
Glenn Beck has taken to the blackboard to outline his objection to TARP or the Rx fix. He goes into very long, tedious explanations of why Obama is a commie, complete with sound bites of Obama which Glenn ridicules with monkey faces. It’s hilarious, sorry. I mean, what does this guy think he has to do to keep a listener? The irony is that he acts as if his constituency’s emotional growth is stuck in fifth grade.
Glenn Beck is doing the country a great service because the splinter acts that will emerge from his show will be enumerable, and one of them might just change the voter apathy that plagues our progress.
William
December 8th, 2009
9:54 am
Is this determination based on facts gather by progressive liberal liars like those in “climategate”? If it does not work then tweak the numbers to come out like you want! Ah then they forged government documents with lies to deceive the public. That is a crime! I want to be a jury on this trial.
BW
December 8th, 2009
9:59 am
Deficit, deficit….it’s $14 trillion and you’re talking about putting less than a trillion on it in a one time payment when the annual budget still produces deficits. Get real…that side of the coin must be straightened out before there will be any deficit reduction and there will be have to be real sacrifice on Social Security, Medicare, Medicaid, and national defense spending before that happens. No politician, regardless of the letter behind their name, is going to tell their constituents that…period. There will have to be grassroots efforts to elect politicians who will go to office with that mandate. Yes there is 10% umemployment but it’s nowhere near depression levels of 25% so most people, while cutting down discretionary spending, are only uncomfortable in that they have a heightened fear of losing their jobs. As for TARP, no one will ever know to what extent the banks would have failed or even if that would have been a bad thing…the well capitalized banks could have picked up the pieces. I think what really broke the camel’s back is when these bailed out business used taxpayer money to hand out bonuses.
Ben
December 8th, 2009
10:02 am
It’s just amazing how many decisions are being made based on wishful thinking and half-baked science that is so settled that they threw away the raw data so no one else could fully examine their work. And it’s amazing how people like Cynthia, who would have wanted proof and facts when Bush was in office, are perfectly happy to accept huge decisions based on fantasy numbers and theoretical results that aren’t backed by reality, and trumpet successes where no actual success can be proven. At best you can only say, “We think it might have been worse if we hadn’t done this, but we don’t really know.”
If only Obama and the Democrats were held by Cynthia to the same standards as Bush and the GOP. Then we might see some good reporting.
Robert
December 8th, 2009
10:21 am
I bet her next opinion piece will be about how the stimulus bill was a success. She can point to the 650,000 “jobs created or saved” numbers Biden and Obama keep talking about. You know she won’t mention anything that will make her party look bad, such as how the data obtained from the states was garbage and how Obama promised to track every dime spent. She will conveniently forget to mention that a good bit of the jobs “created” in this state were summer jobs that ended in September. Of course she won’t discuss how the president warned that if it wasn’t passed then the unemployment would go up. Ummm, the unemployment has gone up. Now Cynthia, why not be a good journalist and do an investigative piece about the lies told to the public about this bill? You could start by trying to figure out what the true number is for Georgia.
Jake
December 8th, 2009
10:27 am
Okay, I’m pretty sure none of the posters know the difference between TARP and the stimulus bill. TARP, passed during the Bush administration is what Cynthia is writing about. It was intended to bail out financial institutions that were in deep financial straits due to the credit crunch/housing bubble. It was not intended to stimulate the economy or anything else. The stimulus bill, supported by O and passed during his administration has only spent a small percentage of the funds allocated to it and it’s very unclear at this point if it’s stimulated the economy. I know everyone is confused because Bookman and Cynthia have actually been applauding Iraq and TARP lately, two accomplishments of the hated GWB.
BW
December 8th, 2009
10:32 am
Jake I think you’re right about that but people are so politically polarized that they will not concede it.
Jess
December 8th, 2009
10:47 am
Let’s tip our hats to Bush for the bailout of the banks. The Obama stimulus has always been the trainwreck and budjet buster, and it still is. In retrospect, I think the stimulus program will be seen as the biggest boondoggle of pork, and political payback in history.
kjugf
December 8th, 2009
10:47 am
chris broe – he goes thru all those antics to help the attention span of his democrat listeners
YOU STUUPID
December 8th, 2009
10:48 am
smoke and mirrors, Mrs. Tucker is the mirror, while the anti-stimulus bill, was the smoke to cover up the bank-bailouts.. why is the stimulas, and the tarp both equal to the same 787 billion number ??
Jess
December 8th, 2009
11:07 am
Just saw on the news where Canada is now adding jobs, and in some cases recruiting high tech employees from the US. Canada did have a bailout, but no significant stimulus program. The US, who had the largest stimulus program among all industralized countries, seems to be among the slowest to recover. This was predicted by many economist. And Cynthia wants more stimulus, and jobs programs.
Most other countries have learned from the US that left to its own devices, the free market will work. Somehow we have decided to abandon this concept, which we pioneered, for the social models of old Europe.
Look where it has gotten us.
No doubt when this economy turns around, as it always has, the media will give, and admin. will take full credit. Hope we all remember then we were the first in, and it looks like the last out of trouble.
sam
December 8th, 2009
11:13 am
apparently he/she is that stupid. i hope you dont drive a car..
YOU STUUPID
December 8th, 2009
11:14 am
Jess,
We will not recover, once healthcare, and Cap and Tax pass the senate, it will be a downward spiral to ward socialism where we will be censored on this board, and we will no longer have the freedoms to read real journalist who excise their right to freedom of press, oh wait, with the patriot act still an active law, media must first get the blessings of the government before posting such articles, man I need to stop living in the past.
Citizen
December 8th, 2009
11:15 am
So Cynthia you are saying Bush’s program worked?
Not a Dumb blabbering Liberal
December 8th, 2009
11:20 am
So I guess this is Bush’s fault too Cynthia? I recall Obama not even wanting to stop campaigning long enough to come back to Washington to work on this bill. But I guess he’ll get the credit.
Now back to the pile of crap that is the “Stimulus Package”….
Ragnar Danneskjöld
December 8th, 2009
11:23 am
Ok, this is odd, but I think Ms. Tucker is mostly right. As my old tax law professor would advise us, don’t ride that horse too far.
The TARP was one of several proposed solutions to the financial distress that arose September 2008. TARP effectively interrupted the world-wide concern over the stability of the US financial system, and the funds pumped down the rathole were mostly repaid. (AIG and Citicorp are notable exceptions.)
On the other hand,was TARP more cost-effective for the purpose than would have been the bankruptcy courts? I doubt it. A lower cost solution, which I proposed at the time on Jim Wooten’s blog, would have been simple government guarantee of cross-institution obligations.
Unfortunately for all of us, the TARP monies, because of the partial success in the limited financial sector design, are now being diverted by big-staters into a massive government slush fund, graft for the grifters.
Chris Broe
December 8th, 2009
11:26 am
The consequence of TARP: Have banking practices changed for the better, with decisions being guided by a consensus of wisdom about what went wrong and aided by common resolutions to steer clear of those mistakes?
Ragnar Danneskjöld
December 8th, 2009
11:27 am
We would all agree that TARP received broad support from the big spenders, mostly democrats, and was widely opposed by conservatives, mostly republicans, which accurately reflects Scty Paulson’s political androgyny. That the program was mostly a product of the fertile imagination of Tim Geithner is well recognized by all. The diversion of TARP monies to automobile companies was unconscionable.
Ragnar Danneskjöld
December 8th, 2009
11:30 am
Great question PoFo, and I am well placed to answer. The bankers are paralyzed by the activist government, reflecting the typical bureaucrat knee-jerk, do nothing that constitutes risk. Thus business credit does not exist for the job-creators in our society. This will not change so long as the government is telling banks how to do their business.
Ragnar Danneskjöld
December 8th, 2009
11:31 am
“Do nothing that constitutes risk” should have been within quotation marks.
Just A Grunt
December 8th, 2009
11:33 am
Yeah I see how well it worked here in Georgia. How many banks is it now that have folded? Like everything else coming out of this administration the facts on the ground don’t match with the statements coming out their mouths.
Grumpy
December 8th, 2009
11:43 am
TARP reinforced the notion that huge entities can do whatever they want and the Nanny State will be there to bail them out. In the 13 months since TARP, nothing has been done to erase that reinforced notion.
Hardly the “right thing” Ms. Tucker
BW
December 8th, 2009
11:54 am
Jess
Canada is functioning because the free market has never been left to its own devices. The banking and housing markets are heavily regulated and of course the government pays for healthcare…i.e. single payer. One can argue that the countries whose regulatory agencies were allowed to work and account for inherent human greed are the ones that are recovering quickest.
ken
December 8th, 2009
11:57 am
When is the las time you saw a “
ken
December 8th, 2009
11:59 am
When is the last time you saw a “HELP WANTED SIGN” ??
Karl Marx
December 8th, 2009
12:02 pm
Over 100 banks failed in Georgia alone and the bailout worked????? Put down the Crack Pipe please.
BW
December 8th, 2009
12:04 pm
Those “100″ banks violated the rule of debts to assets and were seized by the FDIC. Almost overwhelmingly the banks’ downfall is linked to the housing market crash…the bailout was not designed to get every bank off the hook.
CrowDog
December 8th, 2009
12:07 pm
Okay, now the TARP is working but when Bush was in office it was a disaster. Cynthia is lock block overwhelmed by Obama charisma and can’t find fault with this clown. I bet she even believed the jobs saved and global warming hoax.
CrowDog
December 8th, 2009
12:10 pm
BW then the bailout was a fraud. Too big to save? Tell that to Lehman Brothers. Who decides who gets bailed out? Politicians because of political interest. All these banks including the big 3 made the same mistakes as the little banks but the little banks have no lobby like the BOA, Chases, Fargos, etc.
Jess
December 8th, 2009
12:19 pm
And now Obama has just announced we will have to continue spending our way out of this recession. He’s proposing another $120 to $200 billion in stimulus spending which is the money he is recieving from the TARP recovery.
The complete ignorance of this Admin. and congress is breathtaking. I know Cynthia is giddy over this, but most Americans are scared to death of what he is doing. I do not believe people or businesses will start spending until this administration demonstrates it can exercise a bit of self control.
bobfromacworth
December 8th, 2009
12:21 pm
I am confused, is it April fool’s day today? Cause I just can’t believe that C. Tucker is giving anyone remotely connected to GWB a compliment…..
Jimbo
December 8th, 2009
12:22 pm
cynthia, you are really – really – oh nevermind, you wouldn’t understand.
you think anything that obozo does is good for all – marxism seems like your cup of tea (koolaide).
BW
December 8th, 2009
12:23 pm
CrowDog…that is the way the government works…he with the largest lobby prevails. It is true regardless of which party controls Congress or the presidency or whether unemployment is 4% or 10%. Politicians whose pockets are padded by campaign contributions from these lobbies have no real incentive to change policies only to quiet down the people enough to placate them. It’s unfortunate but no one ever said life is fair…this is the state of the American democracy right now.
BW
December 8th, 2009
12:27 pm
Marxism…LOL…you people have been listening to Beck too much….once we put away the slogans though yes Jess is correct that people are sitting on their hands until policies of health care and energy are clearly defined and passed into law or the status quo firmly returns.
Karl Marx
December 8th, 2009
12:28 pm
BW, if the bailout was not designed to get every bank off the hook then who was it designed to “get of the hook” friends, Large political donors, well….. The bailout was BS along with all other vote buying schemes.
BW
December 8th, 2009
12:35 pm
Yes the bailout was BS….my point is to blame Obama or Bush for this BS is a moot point…it will happen regardless of who is in office. Yes politics sucks but what are we the people really doing about it?
Ponder
December 8th, 2009
12:40 pm
SOP for the WH and Dems — ignore the message and attack the messenger!!!
________________
The White House lashed out at the Gallup Poll on Tuesday after the survey’s daily tracking numbers showed President Obama’s approval rating dropping to a new low of 47 percent.
El Jefe
December 8th, 2009
12:41 pm
I want to know what your smoking, I want some.
The only good thing about this recession is that weak banks are failing, strong banks are surviving.
The Savings and Loan failure was worse than this one.
TARP failed, forcing large institutions to take TARP funds is not a winner, it is intimidation and threatening.
I guess according to Chicago ways, you can say it worked, private institutions were forced to take Federal money, opening them up to further government pressures.
Giving the feds control over the private sector is exactly how it will go down when, and I pray it won’t happen, Obamacare is passed, this will put the feds in the position to dictate policy and practices of private insurance companies.
Good bye, freedom, Hello commissar.
JackLeg
December 8th, 2009
12:48 pm
Hey lets use some Obozo logic, why didn’t the banks spend their way out of their problem, better yet why don’t all the bankruptcies/foreclosure people spend their way out of debt? Because it makes no since and does not work, so let’s spend our way out of our debt. What a stupid idea, only an Obozo supporter would support such stupidity. What do they teach at collages nowadays, especially the Ivy League ones…?
BW
December 8th, 2009
12:49 pm
Thanks for conforming my point about listening to Beck too much El Jefe….just please explain to me what you think about Medicare Part D and the Patriot Act. Please tell me with a straight face those programs were not a bid for government control.
jt
December 8th, 2009
1:00 pm
Average US price for 1 dozen Grade A Large Eggs 2007————————–1.51
Average US price for 1 dozen Grade A Large Eggs 2009————————–2.89
It is all working like they planned. What can’t be seized through taxes will be gobbled up by inflation.
El Jefe
December 8th, 2009
1:11 pm
BW,
The discussion is about the current administration.
The President voted for the TARP funding when he was a Senator. The President can not spend funds unless the Congress passes the legislation and the President signs it.
Medicare, broke
Medicaid, broke
Who was responsible – Congress.
As for the current mess with Medicare Part D. Pure crap. AARP loved it though, made them millions.
Patriot Act. Not so much. The push to unionize all the TSA folks, glad it was voted down.
Does it go too far – yes.
Was it wise to balloon the federal employment with those 10’s of thousands of TSA officers, no.
Make the airlines more responsible about safety, as we did during the hijacking era.
Was Bush a great President? He was a good President and had the respect of the military and he kept us safe. I thought his father was a better President, but they both, fell short of what their potential was.
Ed
December 8th, 2009
1:25 pm
I am not disputing whether it worked or not; nevertheless, it is time for President Obama to hold the the banks accountable when it comes to their end of the deal they agreed to after receiving TARP.