The Troubled Asset Relief Program — TARP — expired yesterday, having cost nowhere close to its original sticker price of $700 billion. (See, e.g., TARP Bailout to Cost Less Than Once Anticipated) $700 billion was a guesstimate born of political expedience, more than the $500 billion Treasury officials targeted in their initial bailout plans but less than $1 trillion, which Treasury officials feared might be required to slow the economy’s September 2008 death spiral. As the NYTimes reports in the linked article, taxpayers may even make money of the deal. Maybe.
Remember September 2008? 25 months ago? The government took over Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy, AIG and Merrill Lynch were going down, Morgan Stanley and Goldman feared they were days away from collapse? Wall Street had gone off the rails and crashed into the world economy like the train in The Fugitive? No? Apparently you are not alone:
Fewer than three in 10 Americans say they believe [TARP] was necessary “to prevent the financial industry from failing and drastically hurting the U.S. economy,” according to a poll in July for Bloomberg News. (NYTimes)
I understand the rage against Wall Street’s excesses, but denying that the U.S. and world economy were hanging by a thread in fall 2008 ignores the facts. Which brings to mind Derek Bok’s quote: If you think education is expensive, try ignorance. The gleeful embrace of ignorance is the political Special of the Season; look no farther than Sarah Palin and the Tea Party’s enthusiastic embrace of Christine O’Donnell, the Republican nominee for Governor of Delaware. Rage against Wall Street, rage against TARP, rage against Obama’s stimulus package brought us the Tea Party, a “populist” movement financed by billionaires. If you deny the existence of evolution, it’s easy to deny the plain truth about the need for TARP.