The Success of Bush's TARP

In October of 2008 I stood opposed to TARP.  In October of 2010 I still stand opposed to TARP.  I don't like the idea of government interfering with private markets.  I don't like the idea of government taking ownership in private companies. And I certainly don't like the idea of tax payer money being used to prop up very rich Wall St. CEO's who couldn't balance a checkbook.  I see something fundamentally wrong with all that.  Yet TARP has proven to be a huge success and will undoubtedly become the biggest success of the Bush presidency.

The legislation itself was a massive $700 billion financial aid package used to purchase assets from failing financial companies to hopefully strengthen the American financial sector.  It succeeded at warding off a complete financial meltdown, something I did not think would happen in 2008.  I was wrong, obviously.

As a breakdown, TARP sunk $250 billion into a capital purchase program used to scatter money to small banks all throughout the country.  $40 billion was used to buy up AIG.  $20 billion went to Citi Group and another $20 billion went to Bank of America.  $25 billion went to the automakers and their financial institutions.  Many billions more went into funds to back all of it up.

The result has been surprising.  Bloomberg reports this morning the money sank into the financial sector has earned the American government a return of about $25.2 billion.  The money sank into the auto industry has earned the government a return of about $11 billion.  Given the offset of the earnings, the total TARP program is now only expected to cost the government $30 billion.  WSJ reports this amount is significantly cheaper than the Reagan financial bailout in 1982.  All of this is very good news.  The American people should be grateful President Bush had the leadership to do what was unpopular but in the best interest of the country. It worked and the program should be recognized as a success instead of being trampled on by people who just want something to complain about.

I'm still opposed to the policy.  I don't like it.  But I have enough sense to admit it worked.