This must stay just between us

Well, the snap answer is that you let those banks go out of business and the CEOs get punished by not having a company to run and their horde of stock options suddenly being worthless.

I'd propose (admittedly with very little evidence, although it matches reality close enough that it probably could be backed up given time and enthusiasm) that the actual financial cost of TARP versus the financial cost of backing all the screwed account holders via FDIC is close to a wash. In a nutshell, taxpayers would have been stuck with the same bill either way. (Per standard procedure, the taxpayers take it in the shorts every time ;) ) The real choice we had to make was an emotional one.

Barack decided to TARP and the biggest selling point of that idea is that it propped up global confidence since you didn't have Mom-n-Pop on the 6-o'clock news crying because they lost their life savings (somehow, the news wouldn't be around the next day when FDIC made Mom-n-Pop whole again). The downside of that choice is that Big Banking was relieved of any consequences for their poor choices.
 
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dteowner said:
Well, the snap answer is that you let those banks go out of business and the CEOs get punished by not having a company to run and their horde of stock options suddenly being worthless.

I'd propose (admittedly with very little evidence, although it matches reality close enough that it probably could be backed up given time and enthusiasm) that the actual financial cost of TARP versus the financial cost of backing all the screwed account holders via FDIC is close to a wash. In a nutshell, taxpayers would have been stuck with the same bill either way. (Per standard procedure, the taxpayers take it in the shorts every time ;) ) The real choice we had to make was an emotional one.

Barack decided to TARP and the biggest selling point of that idea is that it propped up global confidence since you didn't have Mom-n-Pop on the 6-o'clock news crying because they lost their life savings (somehow, the news wouldn't be around the next day when FDIC made Mom-n-Pop whole again). The downside of that choice is that Big Banking was relieved of any consequences for their poor choices.
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First, I'd like to point out a glaring institutional contradiction: That you're highly critical of a government bailout program (TARP), yet you have complete faith in a government bailout program (FDIC).

There's no reason why, if it would have been a wash anyway, that after distributing TARP funds, these banks and lending institutions couldn't have been hit with fresh legislation and regulations, as a form of consequences. We just didn't do that.
 
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I don't think you'll find any quotes where I'm highly critical of TARP as a theory. The implementation left much to be desired (as any rushed program will). Barack did a handout with no strings attached, as you point out. The time to roll out the corrective legislation was at the same time as the fat check arrived. Horrible fumble and a golden opportunity completely pissed away. But on a philosophical level, I have no problem with TARP. As you point out, there's no fiscal difference with the existing federal backing program.

All things considered, when you're playing with a consumer economy, confidence is king. Said it before and I'll say it a hundred times more. If you trim away the political handwaving and accept that the fiscal rape is the same either way, you're left with an either/or choice of propping up consumer confidence or letting the banks get exactly what they deserve. Even being the jackbooted vengeful bastard that I am, the consumer confidence was more important at that point in time. I can't excuse the implementation, but I grudgingly agree with the theory.
 
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There's hope for you yet, DTE. Totally agree that a missed opportunity to fix the laws and regulations was missed. I am VERY surprised that nothing was done in the aftermath. Except handwringing about TARP and trying to score political points. Maybe I shouldn't be so surprised. Damn them.
 
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ToddMcF2002 said:
This is why you never want to take money from the government. Leftist agendas and socialist watch dogging. TARP was a huge mistake. Let the free market decide and face the consequences (meaning, never too big to fail).
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So, you would rather be economically destroyed then to have the government TRY to cushion your fall?

You do know why FDR did what he did, with the rest of the world going fascist and communist amongst the background of abject poverty in the industrialized world?

An old saying tells us that we are all just 9 meals away from revolution.

And, we should never forget that starvation was the root cause of the French Revolution, the Maoist revolution in China, and many others.
 
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dteowner said:
I don't think you'll find any quotes where I'm highly critical of TARP as a theory. The implementation left much to be desired (as any rushed program will). Barack did a handout with no strings attached, as you point out. The time to roll out the corrective legislation was at the same time as the fat check arrived. Horrible fumble and a golden opportunity completely pissed away. But on a philosophical level, I have no problem with TARP. As you point out, there's no fiscal difference with the existing federal backing program.

All things considered, when you're playing with a consumer economy, confidence is king. Said it before and I'll say it a hundred times more. If you trim away the political handwaving and accept that the fiscal rape is the same either way, you're left with an either/or choice of propping up consumer confidence or letting the banks get exactly what they deserve. Even being the jackbooted vengeful bastard that I am, the consumer confidence was more important at that point in time. I can't excuse the implementation, but I grudgingly agree with the theory.
Click to expand...

I agree with most of this. I'd add that when injecting capital into an economy, it really doesn't make any difference where that capital is injected. it's more important, i think, to get the money out there, and to clear the Bank's accounts for action.

One would hope that it is done in the most efficient way possible, leveraging every dollar, but that sort of central planning would hardly be tolerated in the US, and, frankly, I'm not so sure the FED, or anyone, for that matter, really knows how to do it correctly at all.

And as a side note, the series of stimulus enacted here in the US was bipartisan, and supported by the bulk of economists at the time, and still is, regardless of the political posturing we keep hearing. it's impossible to prove what might have happened without the stimulus, but we can look back on our own pre-FED days to get a feeling for what a depression is really like. Studying the 1907 depression might open some eyes.
 
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