TARP Helped but at Great Cost

This isn't the first financial crisis, and certainly won't be the last.

 

I disagree. It's just the most obvious handout to financial institutions.

I think most Americans suspected Wall Street was up to something funny. TARP was like the ultimate admission.

 

Of course... but there's no reason to keep having the same one over and over.

 

I define it as preventing a Great Depression that would have resulted in millions more in job losses and billions more in government deficits (due to a lack of revenues and increased social spending). Under that standard, it helped dramatically.

The fundamentals have changed in that we're no longer in crisis and can afford to spend the time to come up with proper regulations instead of knee-jerk reactions (ala the Patriot Act). There is a lot of new regulation in the works now, mostly scheduled for early 2010.

Any examples of these accounting tricks?

The general public would have suffered due to the mistakes of the financial sector, for no reason other than to punish the financial sector. That's not good policy and doesn't help anyone in the short or long run. It just creates a much steeper hill to climb to fix things.

There already is pretty extensive financial reform going through the Congressional process. And, unlike health care, it has a lot more bipartisan support because the GOP doesn't want another TARP either. That's also why the media isn't covering it as much - it's not nearly as exciting when the parties are working together. But it's pretty substantive and potentially reforms the entire regulation system to modernize it.

Absolutely. The gauze bandage provides a temporary fix to a crisis, giving you time to get better treatment. It would have been much worse with no bandage at all.

 

I don't really want to get into another TARP slugfest, but here we go...

I think it is way too early to make that case. We're nowhere near the edge of the woods, much less out of them. It could be that it prevented a very sharp corrective and instead saddled us with a long-term slow, whirling, swirling vortex of doom. And really, if you believe that, wouldn't you make it an absolute priority to fix the problems that led to such a crisis?

I agree there are a number of efforts moving forward, but I don't see anything that will result in structural reform. The good stuff that is out there will get watered down substantially, in no part due to the amount of time opponents have to throw money and lobbyists at the proposed legislation.

Sure. If you have a bank-owned home and you don't put it on the market, you don't realize your losses. There are 8 foreclosed homes within a mile of where I live that I know about and none of them have gone on the market, with several sitting empty since last year. As soon as they go on the market, the bank will have to realize a loss of $200k or more for each of those. So, within a mile of me, that's $1.5-2 million in certain losses that aren't currently on the books. Multiply that by California and Florida and then multiply that by all the HELOCs out there and you have a huge number that everyone is pretending does not exist, even as the houses are overgrown and abandoned or turn upside down.

Hey Sherlock, the general public is suffering. While that suffering may be more pronounced based on where you are in the country, it is evident. And nobody wanted to punish the financial sector. Sure they're assholes and sure, the dewey-eyed look some of you give the Masters of the Universe make me want to puke, but the objective is to fix it, not punish them. We should have done it then and made Bush sign it or remove any doubt that he is the worst of all time and belongs in the company of Nero.

Again, I agree that there are some efforts underway. However, I don't think they'll change the system anything beyond incrementally when we need to blow it up, make a bunch of the financial products and practices of the last 20 years illegal, and change the mindset of the grubby bastards that work there. I don't see it happening.

The point I was making is that the guy who slapped the bandage on thinks thats all you need to do. It may have been worse without a bandage, but it would have been so much better with a thorough diagnosis, proper care, and a well designed recovery program to get the patient walking again.

Bandage or no bandage, without proper care, the patient is in a heap of trouble.

 

Wow, strong words. Did the thadeus do TARP and have to go see the doctor the next month? That is the only explanation.

 

Under what criteria can anyone say how bad the recession/depression would have been without the government's massive infusion. Or whether the cost to your children was worth it. The problems at the time were deemed significant by every expert's opinion.

But no money was getting thrown around without some of it going to the Goldman old boys circle. Fact of life. The people may get wise and elect some populist but, to this point, they rarely have.

To the President I seem to always defend as the rational, reasonable pragmatic
leader I still believe him to be (so far), You don't get mad at the fireman who put out your burning house for getting the furniture wet. He did the best he could do given the immediate need and the political realities.

 

10 homes, approximately $15 million owed...

http://irvinehomes.freedomblogging....hese-million-dollar-irvine-foreclosures/9201/

For someone to buy the least expensive home on the above list at the amount owed on the property, that person would need to put $136,000 down and pay about $3700 a month. There are not that many jobs that can support that many homes at that much value. There never were.

There are a lot of losses still to come.

 

TARP - as much as it was flawed, did prevent the failure of numerous institutions...institutions that had they been allowed to collapse, would have taken many more business and thus many more jobs down the drain.

How many? No one really knows....but there was a risk of things collapsing. Things didn't collapse, and that's a great thing.

Now, whatever TARP was, we need to end it. More importantly, we need to ensure our banking and capital system is never put in this kind of jeopardy again.

 

GAO: TARP didn't work, at least in any measurable way.

http://www.washingtonexaminer.com/opinion/Uncovering-the-bull-under-the-bailout-8426220.html

The full GAO report was issued on October 16, and you can search for it. I'd give a link, but there seems to be problems on the GAO website.

 

That's weird, given that we know with no doubt that the two largest banks in the country, Citi and Bank of America, would have gone under without it.

 

Depends on what you mean by it didn't work. It didn't save us from a deep recession, but did save several large firms. AIG would have definitely went under, with its enormous counter-party risk, who knows how many other firms it would have dragged down along with it.

Now, it is possible that the risks are exaggerated by Paulson/Geithner and company. For example the lehman swaps didn't cause quite as much damage as the experts had predicted, but I don't think anybody was going to take the chance of a total collapse.

 

Which was the bigger risk?

TARP being a waste or a completely financial collapse?