Commentary By Ron Beasley
Steve Benen and Matt Yglesias are praising TARP today. Matt:
Do you think letting the banks fail would have had zero disruptive
impact on the economy? None whatsoever? What other programs can you name
that garned support from Nancy Pelosi and George W Bush, helped people
millions of people, and had a negative cost to the government? And yet
people think it�s horrible, in part because the public sphere has
utterly failed to defend it.
I have a problem with this. If the banks had been allowed to fail there would have been some additional economic chaos but today we still have the basic structural problem that led to the crisis - too big to fail banks. Those very same banks are refusing to loan money making recovery all but impossible. The executives who were responsible for the crisis are once again making 8 and 9 figure salaries when they should be in prison. Even if the country gets all the TARP money back the country is still a loser. I'm sorry but TARP is not being defended because it was indefensible - the too big to fail banks still exist and they are still too big to fail.
Unfortunately Ron both Benen and Yglesias have become useful idiots for anything Obamaian.
ReplyDeleteTARP was probably the single biggest instance of redistribution of wealth in American history. And you're right that they STILL are too big to fail, at least until they come clean about all the bad paper they STILL have, which they have been permitted to conceal.
ReplyDeleteI agree about it leaving the structural problem in place, and in more ways than merely keeping the "too big to fail" institutions alive. It made the wrong people take the bath.
ReplyDeleteI disagree about the "refusing to lend the money" part, though. They are sitting on the money because no businessman in his right mind has any willingness to borrow at this point.
My wife's Grandpa, now long gone, was an old Fabian Socialist who argued that banking should not be a private sector responsibility but a government function only. What other "business," he asked, has no inventory and the only "service" provided is to take your money and lend it to me and charge both of us in the deal? Brokers and sales people who work on commission do the same thing but at least something real is changing hands. Even insurance (risk management) is better than pure banking.
ReplyDeleteRegarding credit, he said our banking system is just opposite our justice system. Legally we are presumed innocent until proven guilty, but in the case of credit, we are presumed NOT WORTHY until proven otherwise. His contention was that when reaching adulthood all citizens should be presumed creditworthy and be allowed a government-backed line of credit to begin their financial life. Those who managed that send-off responsibly would reap the rewards and those who squandered it would then forfeit their credit access until the cleaned up whatever mess they had caused. (Think student loans...)
I sometimes think he was on to something.
Just thinking out loud...