^TARP EXPIRES: HOW DID THE FINANCIAL BAILOUT DO?@<
^(For use by New York Times News Service clients)@<
^By BOB FRANKEN@=
^C.2010 Hearst Newspapers@=
WASHINGTON _ October 6
I'ss just about the hottest argument of the campaign season: Should members of Congress have voted for the trillions of dollars in government bailouts?
The Troubled Assets Relief Program and its offspring turned out to be a mixed bag but the argument misses the point. Back in 2008, under the Bush administration, it wasn't a choice. It was a case of do something to show that the federal government wasnÆt passive in the face of a global financial crisis. Do something, even if it's s wrong. Being right and doing nothing would be even worse.
There were dire warnings from the Treasury Secretary Henry Paulson that credit would dry up and commerce would freeze unless Congress approved federal intervention.
Still on Monday, Sept. 29, 2008, the House stunned the jittery financial world by rejecting Bush'sbailout proposal. Most of the Republican House members had spurned pleas from the president. They insisted it was too hastily prepared and wasteful government interference in the private enterprise system.
The next day the stock market tanked and the Dow industrial average suffered its biggest drop in history.
It took ``tweaking"and downright Bush administration groveling before the House voted a second time that week and passed the revised version. Then, the governments of key banking countries in Europe and Asia also intervened and the worldwide chaos started to subside.
The planet's monetary system wasn't poisoned to death by the toxic greed that came all too close to killing things for everybody. Sad to say, those responsible never had to assume responsibility and, infuriatingly, many have actually thrived as their ``Too Big to Fail" banks, investment houses and corporations stabilized and resumed paying huge bonuses to their executives. They haven't spread the wealth, as the dismal U.S. unemployment numbers attest, but a worldwide Depression was averted.
The TARP program expired this week. Of the $259 billion that TARP pumped into banks, $187 billion has been paid back, with interest. Most of the balance is in smaller institutions. The Treasury Department predicts the U.S. government will turn a $20 billion profit on the effort.
That hasn't been enough to stop political opportunists from making hay. By heaping scorn on the financial rescuers, many Republican candidates have rescued their political fortunes by charging, for instance, that the Obama administration was leading a ``government takeover of business,",fostering socialism and so forth.
They generally ignore the fact that the crisis exploded on the GOP watch and it was the Bush administration that was begging for the bail out.
Here we are now. These very same harsh critics saw to it the so-called financial reform legislation that Congress approved this summer was mighty weak. It did not bring back the wall between banking and investment operations, did not seriously inhibit their risky trading and did leave huge loopholes in credit regulation.
So what's to do? How about a much greater emphasis on preventing monopolies? Somehow, it could be done way back in 1911 when the federal government broke up Standard Oil, relying on the Sherman Anti-Trust law of 1890. The U.S. Supreme Court later ruled that the purpose of the Sherman act ``is not to protect businesses from the working of the market; it is to protect the public from the failure of the market".
Well, the market sure failed us. Only extraordinary government intervention prevented total disaster. Even so, it is now used to stigmatize those who saw no alternative to the rescue other than a crash.
In many cases, the bailout foes this election season are being financed by the same organizations that were pleading for the deluge of taxpayer money two years ago, like the U.S. Chamber of Commerce.
Now they want to pretend it didn't happen, and want to keep things regulation-free. If they get their way in this election, we will have done something that is guaranteed to be wrong.
(E-mail: bob(at)hearstdc.com; on the Web: www.bobfranken.tv)