TARP bailout to be extended
There has been a debate in Washington, D.C. about what to do with the remaining of the TARP bailout funds. Those funds were set aside originally to purchase toxic assets from banks, ensuring that they could survive the recession without a major collapse of the banking industry. Soon after it’s inception, the purpose of the funds was changed by Treasury Secretary Timothy Geithner to include bailouts for the automotive industry, among other things.
As the health care reform debate drags on, some of us have voiced concerns about any public health care option that would be ran by the government. Those concerns come out of a history of watching government programs that seldom stay within the intent for which they were originally designed. TARP is just one example of that fear coming to pass. So far, the funds have been used for much beyond their stated purpose and the verdict is still out about it’s overall effectiveness. It does seem that an overall financial collapse has been avoided, so I suppose that is a good thing.
When the financial problems really kicked in last year, we were told that the credit that many small businesses relied on to meet their financial obligations from day to day was locked up. We were told that it needed to be freed up and that this was the way to get that done. From what I can understand, that same credit is still very, very tight. If I could sum up the usefulness of TARP in a nutshell, I would have to say it has not met it’s stated goals.
TARP was scheduled to end on December 31, 2009, but it will not be. According to CNN Money and other news organizations, Secretary Geithner has sent a letter to congressional leaders, informing them of his intention of keeping the program active until October 3, 2010. He also intends to use the remaining funds for purposes other than buying those toxic assets I spoke about earlier. Some of it will be used to forestall foreclosures and some will be used to promote job growth. It remains to be seen how they will attempt to do either.
One thing I found amusing was this statement from President Obama.
“There has rarely been a less loved or more necessary emergency program than TARP,” Obama said. “Launched hastily under the last administration, the TARP program was flawed, and we have worked hard to correct those flaws and manage it properly.”
Even after nearly a year in office, he is still shifting the blame to George W. Bush. Need I remind you that Barack Obama was very much involved in the negotiations leading up to the passage of TARP by a Democratic Congress? Just so we are all clear, the recession we are in now is not the fault of one person or one administration. It came from the greed of mortgage companies who made bad loans and then tried to profit from those bad decisions. The system should have prevented that from happening and it did not. The financial troubles we have seen in our country are a direct result of that greed.
I’m not sure the original TARP prevented a collapse. Thats only a guess and something no one can prove—opinions differ on this just like those on global warming. Honestly I’m quite tired of politicians telling us what might have been in order to protect their butts from the wrath of the public. Give me facts and not theory and not facts filtered thru half-truths and lies. I’ve little doubt TARP will be extended, but I also have little doubt of its ineffectiveness.
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That is the problem with government programs, they always seem to expand past what the original intent was. TARP is no different. That quote by Obama is priceless, he just can’t help himself when it comes to blaming Bush, even on the issue of TARP which you correctly pointed out that he was involved in.
According to a recent poll only 50% of the people prefer Obama to Bush, with 44% of the people prefering Bush to Obama. That is an incredible number considering how unpopular Bush was at the end. Obama’s tactic of always blaming Bush could backfire as his approval rating has hit an all time low for a president in his first year in office.
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The financial markets are about one thing — confidence. TARP was poorly structured, poorly targetted, and poorly executed but there is no doubt in my mind that it did the one thing it was designed to do — restore confidence to the global financial markets. And given that significant portions of the TARP loans to shore up banks have been or will be paid back soon, the argument that it was a waste of money is hard to support. That said, I completely disagree with the decision to use the remaining $200 billion, or any significant portion, for the purposes outlined above. The government should be able to find other ways to encourage easier credit to small businesses.