On the campaign trail, in tea party events and as part of the political debate in the past two years, the bank bailout has been slammed as a form of socialism and an example of President Barack Obama's penchant for government intervention.
The program - started under President George W. Bush and continued under Obama - has been slammed for helping Wall Street big shots instead of homeowners - and for picking winners and loser in the financial sector.
Commonly called TARP - "Troubled Asset Relief Program" is likely to be a source of ongoing debate for years.
But now after an influx of $7.4 billion from three financial institutions the program designed to help calm financial fears and quell a potential collapse, and Democrats are looking at the strategy and drawing attention to the fact that taxpayers are now benefiting from the intrusion into the market.
Here are the financial details:
Today, three financial institutions—Sun Trust Banks, Inc.; KeyCorp; Financial Institutions, Inc.—repaid a combined total of $7.4 billion to the Treasury Department.
Here's a link to a CNN story on the turn of events.
On the heels of the turnaround of General Motors this gives Democrats a strong defense against Republicans and conservative lawmakers and pundits who have spent years slamming the bank bailout. It likely won't change the philosophical argument over whether the government should be intervening in the free-market and picking winners and losers.
There's no doubt that many folks on different side of the spectrum will simply have to agree to disagree when it comes to the bank bailout - in fact here's a powerful look at the program from the New York Times that still views the bank bailout as a failure because it ended up helping the richest sections of America and left desperate homeowners walking away from their mortgages and ruining their lives.
Here's a snippet:
From the perspective of the largest financial institutions, the glowing assessment is warranted: billions of dollars in taxpayer money allowed institutions that were on the brink of collapse not only to survive but even to flourish. These banks now enjoy record profits and the seemingly permanent competitive advantage that accompanies being deemed “too big to fail.”
Though there is no question that the country benefited by avoiding a meltdown of the financial system, this cannot be the only yardstick by which TARP’s legacy is measured. The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership.
These Main Street-oriented goals were not, as the Treasury Department is now suggesting, mere window dressing that needed only to be taken “into account.” Rather, they were a central part of the compromise with reluctant members of Congress to cast a vote that in many cases proved to be political suicide.
The act’s emphasis on preserving homeownership was particularly vital to passage. Congress was told that TARP would be used to purchase up to $700 billion of mortgages, and, to obtain the necessary votes, Treasury promised that it would modify those mortgages to assist struggling homeowners. Indeed, the act expressly directs the department to do just that.
The program will remain a focal point of debate for years, but with 2012 looming there's no doubt that Democrats have a potent way to punch back against attacks on the bank bailout.
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