TARP Is a Taxpayer Albatross
Bailouts inevitably leave taxpayers in a perennial quagmire.
The Troubled Asset Relief Program (TARP) was Congress’s response in 2008 to a beleaguered financial system that was spiraling perilously close to ruin. In short, it was a desperate effort to bail out Wall Street — and by extension homeowners — by allocating nearly three quarters of a trillion dollars. It was also marketed to bailout-leery Americans as a short-term fix to a crumbling economy. But not only has TARP underperformed, the program has been anything but temporary.
A Washington Post report says that taxpayers, nearly a decade later, are still doling out gobs of money through an offshoot program called the Home Affordable Modification Program. Just how much are we talking about? Additional distribution could come to $1.5 billion for Wells Fargo, $1.1 billion for JPMorgan and $964 million for Bank of America. Other banks will receive more funds as well. According to the Post, “The continuous flow of funds is a remnant of the $700 billion bailout effort … put in place during the financial crisis. Some of that money, about $28 billion, was carved out to help distressed homeowners by paying banks to lower their interest rates and monthly payments.”
The Post continues, “The program, the Home Affordable Modification Program, has undergone several revamps over the last few years and fallen short of helping the 3 million to 4 million homeowners the Obama administration initially hoped. … [T]he stream of cash for the big banks is worrisome to Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, the chief watchdog of the financial crisis-era bailouts. Many of the banks have repeatedly broken the rules of the program, including kicking homeowners out unfairly or making it too difficult to apply for the help.”
TARP is a topic that elicits differences of opinion, even among fiscal conservatives. But regardless of whether the goal was pure and worth the risk, the bottom line is that bailouts inevitably leave taxpayers in a perennial quagmire. It was government policies under the Bill Clinton administration that laid the foundation for the 2008 financial collapse. Today, the government is coming full circle by re-introducing those same failed policies. For those who rail against “greedy” Wall Street, perhaps some re-evaluation is in order. Taxpayers, after all, shouldn’t be the scapegoat for government meddling.