As important as it is note when government makes a mess of things, it’s equally important to point out when it acts decisively to better our lives.
The much-maligned federal bank bailout, also known as TARP or Troubled Asset Relief Program can be termed a success, particularly when we remember what dire straits the nation’s financial system was in just weeks before the 2008 election.
That fall was the sharpest crisis point of an economic crash that was the worst since the Great Depression. Financial institutions were in danger of not being able of providing credit. And financial credit is the lubricant that keeps our economy solvent. The presidential campaigns of then Sen. Barack Obama and Sen. John McCain temporarily came to a halt as they met with President George W. Bush and U.S. Treasury Department officials.
To their credit, Bush and his administration as well as the Democratic-controlled Congress worked together to help the financial institutions keep their doors open. It was distasteful and costly legislation but it was vitally necessary. And now, USA Today reported the Treasury Department estimate that the $245 million that bought shares in banks is likely to return a profit of about $20 billion. The overall effort to save the financial institutions, which included $165 billion that went to non-bank institutions, may cut into those profit figures, USA Today reported, but the jury’s still out on that.
Federal Reserve Bank Chairman Ben Bernanke said it may take four or five years for the nation’s 9 percent unemployment rate (as of January) to fall to the more normal rate of 6 percent. Employment figures have to be taken with a grain of salt since there are many unemployed who have given up looking for jobs. Still January’s employment rate marked the fastest two-month decline in 53 years.
So, in addition to averting a devastating financial depression the TARP legislation appears to have the U.S. on a slow but steady recovery path.