Over at FrumForum, Andrew Pavelyev argues that Republicans “dodged a bullet” with Mike Pence’s decision to not run for president; in an e-mail, he mentioned that his post was partially inspired by my disappointed reaction to the Pence news on the Three Martini Lunch.
At the heart of complaint with Pence is TARP, and that by leading the charge against TARP at the time, “Pence failed to discern the lesser of two evils correctly, [raising] serious questions about his judgment (as well as his understanding of conservative principles).”
Most Americans don’t follow the financial markets closely; almost all of us, including myself, wish we understood it better. In autumn of 2008, we were told that if TARP did not pass, financial Armageddon would soon follow. I recall believing at the time that the stakes made the distasteful steps necessary.
Even then, however, there were indications that the whole enterprise was a cynical game: Then-House Speaker Nancy Pelosi was imploring House Republicans to get on board with the TARP proposal, while her lieutenant, Chris Van Hollen at the DCCC, was planning to use the vote in attack ads against Republicans in the 2008 House elections. In this light, Pence was trying to prevent his colleagues from acquiescing to a politically suicidal act spurred by bad-faith arguments.
Pavelyev can argue that the financial results since the enactment of TARP demonstrates it necessity; I’ll let the fiscal and economic pros argue that. But the populist outrage against TARP is not based on ignorance. The management and oversight of TARP since that vote represents a fundamental violation of trust with the American taxpayer, indicating TARP opponents had good reasons for their doubts. If you’re going to ask the federal government to give you gobs and gobs of taxpayer money to save your business because you claim the economy itself depends upon it, you had better treat that money as preciously as if it were water in the desert. The governing class and our financial titans said, “we need the money badly; we need you to trust us.” Americans did so, and then they saw that trust abused.
We witnessed hundreds of millions of dollars set aside for bonus payments at AIG. Much of the money ended up in the coffers of bailed-out firms foreign partners. The rules and scope kept changing: TARP wasn’t set up to help domestic automakers, but Bush and Obama decided to expand it. The Special Inspector General of TARP has charged 45 individuals with fraud and has 142 ongoing investigations, including 64 into executives at financial institutions that applied for ore received TARP funding, according to their most recent report to Congress. And at last count, 144 institutions had not made at least one scheduled dividend or interest payment.
To defend TARP, it takes more than, “the government gives taxpayer money to undeserving individuals and entities all the time. Life ain’t fair,” as Pavelyev writes. That’s about one step away from turning a blind eye to criminal fleecing of taxpayers. To really work effectively, the entire TARP enterprise required recipients and lawmakers to behave with responsibility, transparency, honesty and competency. We didn’t get that, which strengthens the argument of those who opposed it.
In short, almost nothing that was promised about TARP panned out, except that we could argue that we have indeed avoided financial Armageddon. Instead, we enjoy this milder, semi-miserable Armageddon Lite with a jobless recovery and a moribund housing market.