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TARP, the “bank bailout,” was the first big issue facing the Obama administration before its roughly $800 billion stimulus plan and its health insurance overhaul that stoked the rise of the Tea Party movement. After supporting TARP, several Republicans lost elections largely because of their votes. For many Americans, TARP is more than a vote; it is a symbol of big government at its worst, intervening in private markets with taxpayers’ billions to save Wall Street plutocrats while average Americans struggle to make mortgage payments.  “This is the best federal program of any real size to be despised by the public like this,” said Douglas J. Elliott, a former investment banker now associated with the Brookings Institution. “It was probably the only effective method available to us to keep from having a financial meltdown much worse than we actually had. Had that happened, unemployment would be substantially higher than it is now, the deficit would have gone up even more than it has,” Mr. Elliott added. “But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.”  Furthermore, the TARP could conceivably earn taxpayers a profit. Whatever the final losses from housing, auto companies, A.I.G. or smaller banks, those will be offset by taxpayers’ profits from the big banks that have been the focus of their ire since 2008. Treasury reckons that taxpayers will lose less than $50 billion at worst, but at best could break even or even make money. Its best-case assumptions, however, assume that A.I.G. and the auto companies will remain profitable and that Treasury will get a good price as it sells its corporate shares in coming years.

Anger at fat cats getting bailed out even as they were complicit in the financial crisis has blinded the public to the priorities in the TARP—saving the banks rather than troubled home-owners.Treasury has been ready to use up to $50 billion to help modify mortgages for people facing foreclosure, but its initiatives have been such a failure that little has been spent. Yet little of the protest against the TARP going to the banks has been directed in favor of the home-owners. It has hardly been even considered that a law might be passed to make foreclosures illegal.  The right to life, liberty and the pursuit of happiness surely includes the right to shelter. A person’s house should not be treated as a mere commodity of a market, to be transferred at will.  In other words, in our blind devotion to the sanctity of contract, we are settling for less security on things that could be considered rights because they are necessary to being able to live.  The same problem exists in basic health-care.  Do we really want to hang life in the balance?  The priorities in TARP are telling for what was relegated.  Rather than pointing in jealousy to those who were privileged in TARP, we might have been more concerned about who was left out. So I am not so inclined to celebrate breaking even on TARP—but primarily because the complicit bankers got a windfall that they did not deserve.

Source: http://www.nytimes.com/2010/10/01/business/01tarp.html?_r=1&hp