Two years after the Troubled Assets Relief Program, better known as TARP, was approved by Congress, Treasury Secretary Timothy F. Geithner looks back to assess the impact of TARP.
At a recent town hall meeting, Geithner discussed the $700 billion bailout package, which is set to expire this Sunday. While economic by and large agree that the package, approved in the heat of the economic crisis, saved the US economy from financial ruin it has come to be reviled by many in the country, even the lawmakers who voted for it.
Geithner acknowledged the paradox that was TARP, that people had a right to feel angry about the bailout of the big corporations who were to blame for the financial mess in the first place, but like many things in life, TARP was not fair, but necessary nonetheless.
Despite its unpopularity, many economists say that without the TARP measures, the situation could have been far worse. Economists Alan Blinder and Mark Zandi wrote in a recent paper, “while the TARP has not been a universal success, it has been instrumental in stabilizing the financial system and ending the recession [without which] the entire system might have come to a grinding halt."
While the cost of TARP has been steadily declining as banks pay back bailout loans, the overall cost of saving the financial system, excluding TARP is estimated in the range of $1.5 trillion. The bailouts have left the government deeply entrenched in the private sector, which has caused considerable resentment and anger.
