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Home Publications Blogs Beat the Press TARP Celebrations: Round 657

TARP Celebrations: Round 657

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Tuesday, 30 November 2010 05:52

A new report from the Congressional Budget Office prompted another round of celebrations in the media over how little the program cost taxpayers. In fact, the program kept the major Wall Street banks in business preserving trillions of dollars in paper wealth for stockholders, bondholders, and top executives at these institutions.

The situation can be compared to one in which the government prints up a trillion dollars and hands it to the Wall Street gang. Since the money was just printed, it does not require any tax revenue. Nonetheless, this transfer will be a burden on all non-Wall Street types in future years, since the Wall Street crew will have a claim on society's resources that they would not otherwise have.

In the case of the TARP and related Fed and FDIC programs, the government made trillions of dollars in loans and loan guarantees available to the banks at far below market rates. This allowed them to survive in a situation where they would have gone under if the market had been left to work its magic. The fact that Goldman Sachs, Citigroup, Morgan Stanley and the rest still exist and its top executives are hugely wealthy is a direct result of the taxpayers' generosity.

Comments (3)Add Comment
...
written by Marty, Brentwood NH, November 30, 2010 7:45
And couldn't the same boastful argument have been used if we taxpayers had printed money for public works stimulus instead? With the "trickle-up" effect of all that spending and rebuilding, it would have cost us little in the end, and we'd have all that shiny new infrastructure for us all.
generosity
written by david, November 30, 2010 9:45
I won't hold my breath for them to repay in kind.
Did the banks pay back the TARP loans?
written by David H., December 01, 2010 10:00
The right-wingers---notably George W. on Jay Leno the other night---that the banks paid back their TARP loans?

Is this really true...I've heard comments that they paid back the loans but it was merely a transfer of funds from other government programs designed to help strapped homeowners?

If this is true, then the cost to the government/society is even worse then you describe!

Thanks for all the great commentary---I regularly8 check your column!

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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