Repaying TARP

The Obama administration may be letting a good "crisis go to waste," said Rex Nutting in MarketWatch, by allowing 10 large U.S. banks to repay $68 billion from the Troubled Assets Relief Program bailout. Our banking system is still a "ticking time bomb," and the green light on TARP repayments shows we've lost the urgency to reform it now that it fears of another Great Depression are easing. The "simplest and most obvious" fix would be new rules to keep any bank from becoming "too big to fail."

If some banks are healthy enough to get from "under the thumb of the government," said Tyler Cowen in The New York Times, that's "one gift horse we should not look too closely in the mouth." People disagree over whether the bailouts were a good idea in the first place, but "we can all agree that the entire episode has been a national nightmare" best put behind us.

Banks that can afford to should be allowed to "get out from under the TARP," said The Wall Street Journal in an editorial, but only if they're also willing to be cut off from all other forms of federal cheap-money largesse. One way to push out banks reluctant to check out of the "too-big-to-fail club" is to show the markets that "at least one big institution can fail." Breaking up and selling Citigroup—the obvious choice—"wouldn't be cheap," but it would be worth the cost if it restored "confidence in the overall system."

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