The Corner

The Real Cost of TARP

When assessing the impact of the Troubled Assets Relief Program, commentators often note that the program didn’t end up costing much to taxpayers. The program, which was created in October 2008 in response to the financial crisis, authorized the use of $700 billion to help stabilize the economy. According to a recent CBO report, the program used $428 billion of the $700 billion — at a net cost to the federal government (read: taxpayers) of $34 billion. That, the Treasury has long argued, should be perceived as a real success considering that the original cost of TARP was projected to be $356 billion before banks started repaying their debt faster than originally planned.

If this sounds too good to be true, that’s because it is. Among other things, a new GAO report shows that nearly half of the banks that have returned their TARP money have paid taxpayers back with money from other taxpayer-funded programs that support banks. My colleague Hester Peirce gives us the highlights from the GAO study:

The GAO found that nearly half of the banks that have returned their TARP money have done so with money from other taxpayer-funded programs that support banks. GAO also found that, as of the end of last year, 130 of the 352 banks that are still in TARP were on the FDIC’s problem bank list, which means they are having such severe problems that they might fail. The remaining TARP banks are less profitable, hold less capital, and hold worse assets than their counterparts that have already left TARP or were never in it. More than forty percent of the remaining banks have failed to make dividend and interest payments. 

This picture of the seamy side of TARP is one that the government would prefer we did not see. GAO called Treasury out for failing to be transparent about the poor state of the remaining TARP banks as compared to other banks. Treasury should heed GAO’s recommendation and come clean about the likelihood that many TARP banks will not pay their money back. Taxpayers who put their money on the line have a right to know whether they should expect to get it back.

The whole thing is here.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Most Popular

U.S.

Men Literally Died for That Flag, You Idiots

The American flag’s place in our culture is beginning to look less unassailable. The symbol itself is under attack, as we’ve seen with Nike dumping a shoe design featuring an early American flag, Megan Rapinoe defending her national-anthem protests (she says she will never sing the song again), and ... Read More
Politics & Policy

He Just Can’t Help Himself

By Saturday, the long-simmering fight between Nancy Pelosi and her allies on one side and the “squad” associated with Alexandria Ocasio-Cortez on the other had risen to an angrier and more destructive level at the Netroots Nation conference. Representative Ayanna Pressley, an African-American Massachusetts ... Read More
Books

The Plot against Kavanaugh

Justice on Trial, by Mollie Hemingway and Carrie Severino (Regnery,  256 pp., $28.99) The nomination and confirmation of Brett Kavanaugh to the Supreme Court was the political event of 2018, though not for the reasons anyone expected. All High Court confirmations these days are fraught with emotion and tumult ... Read More
Politics & Policy

Ilhan Omar Is Completely Assimilated

Beto O’Rourke, the losing Texas Senate candidate who bootstrapped his way into becoming a losing presidential candidate, had a message for refugees who had come to America: Your new country is a hellhole. The former congressman told a roundtable of refugees and immigrants in Nashville, Tenn., last week: ... Read More
White House

On Gratitude and Immigration

Like both Rich and David, I consider it flatly inappropriate for the president of the United States to be telling Americans -- rhetorically or otherwise -- to “go back where you came from.” In consequence, you will find no defense of the president from me, either. What Trump tweeted over the weekend was ... Read More
Sports

We All Wanted to Love the Women’s Soccer Team

For the first time in my life, I did not root for an American team. Whatever the sport, I have always rooted American. And if those who called in to my radio show were representative of my audience, many millions of Americans made the same sad choice. It takes a lot for people like me not to root for an ... Read More
U.S.

The ‘Squad’ Gives a Gift to Donald Trump

On Sunday, Donald Trump gave the Democrats a gift -- comments that indicate he thinks native-born congresswomen he detests should “go back” to the countries of their ancestors. On Monday, the four congresswomen handed Trump a gift in return, managing to respond to the president’s insults in some of the most ... Read More