TARP, the Troubled Asset Relief Program, passed by Congress in late 2008 expired on October 3, 2010. The entire value of TARP was 700 billion dollars. The reason it was created was because mortgages and other bank assets were losing value fast in 2008. The idea was for the government to buy these "toxic" assets from the banks so the banks could have nice, clean balance sheets and would continue doing their job. That is, lending money. In the end, only 475 billion of TARP was used. Also, not all of the TARP money was given to banks. Some was given to the automobile industry and other industries where relief was needed.
(It seems that a large part of the economic problem right now is that banks are unwilling to lend money. How can TARP be viewed as a success if it did not prevent what it was supposed to prevent?)
Did TARP have anything to do with the "too big to fail" policy? Without TARP, would the big banks have gone under and dragged the economy down, too? If so, TARP was a success. If not, we wasted quite a bit of taxpayer money that could have gone into stimulous and simply reinforced high-risk behavior for banks (they have a safety net). This is complicated stuff devoid of any possible scientific verification and we never will know the answer.
ReplyDelete