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Home Publications Blogs Beat the Press The NYT Could Not Find Any Critics of the TARP

The NYT Could Not Find Any Critics of the TARP

Friday, 01 October 2010 07:38

This is striking, since most of the country falls into the critics category. Apparently, the NYT doesn't know any TARP critics.

If they did, and they talked to them for their article on the end of the TARP, the critics likely would have told the NYT that the TARP preserved Wall Street as we know it. Had the market been allowed to do its magic, Citigroup, Goldman Sachs, Morgan Stanley, Bank of America, and many other fine institutions would have been bankrupt. This would have redistributed more than a trillion dollars of wealth from the shareowners, the creditors, and the top executives to the rest of the country.

By providing them with loans at below market interest rates, the TARP and the much larger Fed and FDIC bailouts, allowed the banks to survive the crisis created by their own recklessness. This was like giving away food during a famine. The banks have repaid the food with interest now that the harvest has come in, but to pretend that we did not do them an enormous favor at enormous cost to taxpayers (we could have rescued others with these loans) is absurd.

The claim that we averted a second Great Depression with the TARP is a great children's story, but no one has any clue how the decision to not do the TARP would have necessitated a second Great Depression. The first Great Depression was the result of a decade of bad policy, not just an initial policy failure at its onset.

Comments (14)Add Comment
one nation, under goldman
written by frankenduf, October 01, 2010 8:11
nationalizing the banks also never got much air play, even though smarter countries did it, the reagan administration did it, and states have done it (taken over banks to fire the failed executives and help ease the ledger cleanup)
written by izzatzo, October 01, 2010 8:29
Dear Big Government,

Thank you for saving us under the Infant Industry Baby Banks Program designed to protect us from ruinous competition until we can regain our Economies of Scale, Scope, Savage and Scavage, which have already allowed us to pay you back with a handsome profit. For a while there we were worried about being unemployed.

Now that we're healthy enough to return to our usual business, teaching the public the true meaning of opportunity cost under markets free of government interference, please feel free to send your representatives to our upcoming conference, Why We Are Worth Saving And The Unemployed Are Not.

Deeply Indebted Always,

Moral Hazard
Privatized Gains
Socialized Losses
written by sherparick, October 01, 2010 9:04
I will post your comment in the Times comments on this article if you don't mind. Funny, that these business and economic reporters at the Times, WSJ, and WaPo just can't ever find your number.
written by diesel, October 01, 2010 10:33
"Had the market been allowed to do its magic, Citigroup, Goldman Sachs, Morgan Stanley, Bank of America, and many other fine institutions would have" disappeared, vanishing into thin air like gas released from a bubble.
written by liberal, October 01, 2010 11:06
frankenduf wrote,
...even though smarter countries did it...

People (including Krugman) keep trotting out the Swedes as an example.

While what they did was probably better than what we did, it should be noted that (IIRC) the Swedish government ensured bondholders were paid in full, which from the standpoint of fairness is completely wrong.
The article says,
written by diesel, October 01, 2010 11:41
"TARP is more than a vote; it is a symbol of big government at its worst, intervening in private markets with taxpayers’ billions to save Wall Street plutocrats while average Americans struggle through the recession those financiers spawned."

“But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.”

Does anyone else sense the disconnect between these two statements? If the banks were indeed strictly "private markets", then how could intervention be "good for the public"? So either the banks are not strictly "private markets" or helping them was not at the same time "good for the public".

The propaganda and lies of the Republicans have come home to roost. Having framed all government/business issues in the simplistic "free markets"/big government false horns of a dilemma, the Republicans cannot now convince their base with a truthful account of what just occurred.

It may well be true, as Dean has stated in other articles, that the economy would have survived the collapse of the investment banks, and that we'll "never know". Nevertheless, the point remains. The Republicans have deliberately falsified the relationship between business (especially banking) and government and are now reaping the harvest of the ignorance they sowed. Then again, maybe not, since they've succeeded in blaming Obama for the bailouts and, according to polls, Teapartyers aren't aware (in spite of having just lived through the experience) that they occurred under Bush.
Deja Vu all over again
written by Bilejones, October 01, 2010 3:46
Was it NYTimes critic Pauline Kael who said" Reagan? Reagan won? I don't know anybody who voted for Reagan"
written by John, October 01, 2010 7:56
Are you saying that the government should not have done anything at all and had it play out in bankruptcy court, or do you mean that the officials should have handled it as it handles other failing banks (through the FDIC)? I do agree that the taxpayer totally got shafted.
I know Diesel likes history ...
written by AndrewDover, October 01, 2010 8:54


written by xteeth, October 02, 2010 6:23
How can you miss out on commenting on the phony "payoff" of common shares to the Federal Gov by AIG. This isn't a payback they are just issuing shares of stock. It was all over the news last night that AIG was paying back the government when all they were doing is printing paper. Since the gov owns 93% of the stock, whether it is $29 or $45 the first share put on the market will make the value fall to $2 and we will be defrauded out of all the money we used to keep them from failing. Who is running this insane asylum? Economic monkeys?
written by skeptonomist, October 02, 2010 8:44
There has been more than a decade of bad policy recently. Starting in the 80's the corrections to policy which were passed during the Depression have been systematically rescinded. The 2008 crisis has not led to significant reforms, and the failed institutions were just propped up. There will probably not be another housing bubble soon (despite the efforts of the real-estate lobby), but there will likely be one in another area: making bubbles is what finance - and the Fed - do.
written by Jimbo, October 02, 2010 9:18
Keep at 'em Dean. I'm tired of my steady diet of lies and propaganda.
written by killben, October 02, 2010 1:56
As far as Bernanke is concerned the tax-payer is an inviting target to be shafted whenever he has the desire or his bankster pals ask him to do so.

Bernanke generally likes tax-payers ar%^!!
written by UGG, October 02, 2010 10:10
ugg ??????

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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.