The 2008 "bank bailout" may be political poison, but it has turned out to be a financial success, Bloomberg reports. The federal government has earned $25 billion on its $309 billion investment in banks and insurers through the Troubled Asset Relief Program (TARP), equalling a hefty 8 percent return at time when treasury bonds yield only 3 percent. Still, TARP — passed by George W. Bush and enacted by President Obama — has been a net loss in "political capital" for Democrats and for lawmakers from both parties who voted for it. Should this redeem politicians who voted for it?
Turns out TARP was a "pretty-good investment": You have to feel bad for all the lawmakers who "will lose their jobs" in November for supporting TARP, says Ezra Klein in The Washington Post. This "unjustly maligned" program probably, "when all is said and done," will earn taxpayers a tidy profit — and the $25 billion "doesn't even count the benefits of avoiding the wholesale collapse of the financial system."
"The government's pretty-good investment"
No, the hidden costs will swamp any profits: TARP did manage to "enrich Wall Street executives" and pull their banks "back from the brink," says David Dayen at FiredogLake. But it didn't fix our underlying financial problems, and it has been a "lead weight on the economy." Besides, TARP is only 2 percent of the "total money" the feds gave or lent Wall Street, and taxpayers will take a bath on the other investments.
"Here we go again: No, TARP is not a 'success'"
Good numbers can't beat bad opinions: TARP is "almost a perfect example of a total no-win situation," says Stan Collender in Capital Gains and Games. The 8 percent return "makes the federal government look like it has the smarts of Warren Buffett," but voters will imagine that the profit is coming out of their pockets, not the banks'. Still, if TARP had shown a loss or if the government had done nothing at all, they would be even angrier.
"Are you happy or angry that the government has made 8.2% on TARP?"