Their Dirty Little Secret: GOP Senators Say Bailouts Worked -- Just Please Don't Tell Anyone

[kpete]

Source: Talking Points Memo

Their Dirty Little Secret: GOP Senators Say Bailouts Worked -- Just Please Don't Tell Anyone!
Brian Beutler | May 14, 2010, 9:46AM


Perhaps the most fascinating political conundrum of the 2010 election is one faced by GOP senators, almost all of whom voted for TARP and supported some of the other bailouts in the thick of the financial crisis. The good news is that, for all their shortcomings, the bailouts did the trick, preventing a deeper economic crisis. The bad news is those bailouts are now considered political poison by the tea partying conservative base.

That puts Republicans in a strange position: unable to say the legislation failed, but at pains to distance themselves from their vote nonetheless. Over the past couple days, I've asked a number of GOP senators whether, nearly two years later, they think the bailout bill was effective. Their answers were revealing.

Sen. Judd Gregg (R-NH), who's retiring at the end of the year and is therefore unencumbered by the need to defend himself from the GOP base, has nothing to run away from.

"It was extremely effective," Gregg told me. "Not only was it effective and stabilized the financial industry, it also returned to the taxpayers almost $20 billion in interest and dividends that they would have otherwise not have."

Read more: http://tpmdc.talkingpointsmemo.com/2010/05/gop-senators-dirty-little-secret.php?ref=fpa

[Demeter]

1. The Bailouts Manifestly Did NOT Work as Advertised

They saved the Too Big to Fail banks and many hedge funds, but killed the economy and hollowed out the country's jobs and exports.

[ixion]

4. Exactly.

Spot On, Demeter.

[Igel]

5. What was it advertised to do?

Shore up banks and prevent additional bankruptcies or insolvency; ease a liquidity crunch; provide stability to the banking system. Further, it was to buy up toxic assets and restore confidence, not between Joe Sixpack getting his line of credit for a new patio but between banks and financial institutions. After that, it was to help small businesses--but months after TARP was approved, it still hadn't significantly gone for that because it was unclear how that was to work (after all, while it was to help large banks lend to small businesses, it also had as a specific purpose for the funds to help small businesses).

Everything that had a clear mechanism for implementation worked. The small business loans we still see in limbo--with a current proposal, 16 months late, on figuring out how to implement it.

GM wasn't really under consideration for TARP funds, even when Obama asked for the 2nd "tranche" of the TARP funds to be released. Yet it was moved to the front of the line for TARP funds.

TARP wasn't supposed to increase employment directly, it wasn't supposed to increase exports directly. It was to stop bad stuff that was going on. It was supposed to be payed back. At least under initial assumptions. Much has been--that's one contributor to the reduced projected deficit for this year. (Shhh--it's a secret that this was a loan that helped to swell one fiscal year's deficit number and deflate the following year's deficit number.)

Everything else went as expected. For example, unemployment dutifully followed the leaders.

[Jennicut]

6. Our jobs and exports were hollowed out far before TARP.

TARP shored up the banks but the economy had other, deeper issues then job huge banks. NAFTA has already caused damage, as has the rise of China and Asia in general.

[Kelvin Mace]

7. Well, they certainly made a lot of people VERY rich

while making the remaining 99.9% of us very poor.

[kentuck]

2. The bailout saved the banks...

...a lot of money.

[florida08]

3. yes it did work

for the most part. Saving pensions, savings accounts, money markets and 401k's but much was lost because of their slow response. Greenspan knew way before it was made public. They made the decision to let the jobs market die to save the banksters which own 60% of the GDP