As a downtown Manhattan resident, I have had the unique opportunity of experiencing the OWS protesters first hand. I have talked to a few and I have observed their protest. I have to say upfront that the people I’ve met have been very pleasant, well-meaning, interesting people. I truly believe that they believe that banks, corporations, and government are at the heart of all that is wrong with the economy and the country in general.
All good intention aside, is it just these folks – or – is it the majority of Americans who haven’t read an update on the TARP balance sheet since early 2009? In search for some clarity, I found this article from the National Review. Basically, it breaks down in simple math what was given specifically to banks (whether they wanted it or not) and what has been repaid. “Most banks have repaid their TARP money. As of Aug. 31, the Treasury had received $183 billion of the $205 billion distributed to financial institutions. The Treasury also got $26 billion from dividends, interest and stock, resulting in a slight profit for the program.” Yes, $4B in profit from banks, you read that right.
A couple of more facts that might interest some is that TARP was originally slated to be a $700B program – but only ended up being a $549.4B program. However, people, OWS people especially, keep referring to the $700B. So where did the money go and does everyone realize that Banks were not alone in TARP – but are the only one’s who have basically paid it back with a gain to the taxpayer? Yes, GM and Chrysler were cleverly folded into TARP and their earnings are up and I don’t see anyone “Occupying Detroit”. In fact, that is just one example of how TARP helped the “working man” from saving the U.S. automakers from going under.
So, when you watch the news and you hear people talk about a “bailout” that was actually forced on banks to keep the credit pipeline open for small, medium, and large business payrolls and the “$700B” number as opposed to the $549.4B that was actually used – please keep in mind the $209B that the banks have paid back – with a $4B gain to the “taxpayer”. Keep in mind the workers in Detroit who get to keep their jobs, and the payrolls across the country that did not get frozen.
The author of the National Review article sums up the real cost of TARP: “Defenders of TARP have always argued, and will continue to argue, it was necessary to prevent a national credit freeze and a catastrophic domino effect of businesses collapsing because they couldn’t get loans for operating capital. But that financial market-saving move came at enormous political and social cost, accelerating a corrosive distrust of almost everyone even remotely associated with banks, big business, wealth, or the political system.”
The government, the corporations, and the financial services industry is not without imperfection. However, I think that many have learned from what happened in 2008 and we should all band together – not against each other – to rebuild our economy for the greater good. Getting the facts straight and current would be helpful as well.
