Was the Bush TARP Program a Mistake?

by Gregory Hilton
March 28, 2010
Gregory Hilton posted another great article on the TARP Program almost exposing the truth behind the action. It is imperative the American people learn what really happened in September 2008 ... and hopefully one day the culprits that caused the near collapse of the US economy will be exposed and prosecuted.

Many Republicans who supported the Bush Administration’s Toxic Assets Recovery Program (TARP) are now encountering GOP primary problems. Some of these GOP voters are lumping TARP into the same category as the Obama stimulus (which was opposed by every Republican), the $3.6 trillion budget, the costs associated with health care reform and the use of Fannie Mae and Freddie Mac to subsidize irresponsible lending. Some of these voters do not realize that there was a major difference in how TARP was administered by the Bush and Obama administrations.

Some of “these voters” are being deliberately ignorant of the major differences, not only in the administration of the TARP funds, but of the administrators themselves. Once it became fashionable to belong to the BDS Club of America, many so-called conservatives and republicans simply cannot give up their favorite past time -- bashing President George W. Bush and placing him in the same category as the communist Obama/Soetoro.

The voters have already inflicted punishment on TARP backers. Senator Kay Bailey Hutchison (R-TX) was called “Kay Bailout” by her primary opponent, and was defeated in her attempt to win the 2010 GOP gubernatorial nomination. TARP is also a major issue in the primary battles confronting Sen. John McCain (AZ) and Bob Bennett (UT).

Hutchison may have been called “Kay Bailout”, but there are many other grievances against her besides her TARP vote. The gutting of the The Secure Fence Act and her love of the illegal alien invasion come to mind.

Rep. Gresham Barrett (SC) is feeling the heat in his gubernatorial primary, and was booed of a stage because of his TARP support. Many Republicans supported TARP which was proposed by the Bush Administration. In 2008 it was endorsed by McCain and then Gov. Sarah Palin (R-AK). Former Gov. Mitt Romney (R-MA) said supporting TARP was difficult for any Republican but it was the “correct and courageous” thing to do.

Romney went on to say:

"I hate the way TARP was administered, but I can tell you that we were on a precipice unlike anything we have known before in modern history with the potential of a complete collapse of our currency system and our financial system. Had we not taken action, you could have seen a real devastation. . . TARP prevented a systemic collapse of the national financial system. . . It was intended to prevent a run on virtually every bank and financial institution in the country."

“I hate the way TARP was administered” -- is this the new way of showing non-support of one’s support? For years so-called republicans and conservatives gave us a daily rant of “we support the WOT, just not the way it was fought.” It got old then with that issue and the non-support support has run its course. Enough all ready. President Bush is gone -- no need to continue smearing him.
And PLEASE…DO NOT think McCain is being opposed strictly for his endorsement of TARP. His vote and support of TARP is the least on a long list of offences against the republicans, conservatives and the American people!

Nicole Gelinas of the free-market Manhattan Institute noted: “We were never going to escape this debacle without pumping massive amounts of taxpayer money into the financial system.”
The first $350 billion TARP installment was spent by Bush and the second $350 billion installment went to the Obama Administration. TARP passed the Senate on October 1, 2008 on a 74 to 25 vote, and the House approved it on October 3 by a 263 to 171 vote.
TARP was supported by 34 Senate and 91 House Republicans, but public opinion was always strongly against TARP. TARP was designed to address the subprime mortgage crisis, and it was enacted during a year of tremendous upheaval on Wall Street.

The only real problem I see with TARP was leaving $350 billion to what would become the Obama administration. If President Bush only needed $350 billion to stop the bleed, that is all that should have been appropriated. The next administration should have had to request additional funds if necessary. Of course, Obama did not care about stopping the drain, and is in fact doing everything in his power to undo the good that was done via the TARP funds.

This difficult year included the sale of investment banks Bear Stearns and Merrill Lynch, the failure of Lehman Brothers and the government rescue of the American International Group, Fannie Mae and Freddie Mac. None of this halted the panic on Wall Street.
TARP was a capital investment in the financial system to prevent a huge collapse. It was essential to save the financial markets because they have an enormous impact on pensions, savings, investments and mortgages. In the fall of 2008 many experts said the worldwide banking system would collapse within days without TARP.

Mr. Hilton, you really should not have left out the September 11, 2008 run on our banks via a $5.5 Billion draw down of mutual funds within 1 hour. Granted that tidbit of information did not become public until February 2009, but it still amazes me how no one will talk about it.

After Lehman Brothers failed in mid-September of 2008, all commercial credit in the United States came to a halt. With the credit markets frozen there was tremendous volatility in the stock market. Bush was told by Treasury Secretary Henry Paulson and Ben Bernanke, the Chairman of the Federal Reserve Board, that a failure to act decisively could plunge our nation into another Great Depression.
They said without a massive government intervention, America faced a total financial collapse because of lost confidence in the banking system. Bush said, “I readily concede I chucked aside some of my free-market principles when I was told by my chief economic advisers that the situation we were facing could be worse than the Great Depression.”

Here again the $5.5 Billion draw down had a massive impact on our financial stability. Rep. Paul Kanjorski also said:

“The Treasury opened up its window to help and pumped a105-billion into the system, and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts, and announce a guarantee of $250k per account so there wouldn’t be further panic out there, and that’s what actually happened. If they had not done that, their estimation was that by 2:00 that afternoon, $5.5 TRILLION would’ve been drawn out of the Money Market system of the US, would’ve collapsed the entire economy of the US and within 24 hours the world economy would have collapsed.”

This information made public by Rep. Paul Kanjorski in 2-09 was probably known by most, if not all, members of congress at the time and very well may have been the basis of the statements you cite below.

Rep. Sue Myrick (R-NC) spoke for many of the GOP TARP supporters in September of 2008 by saying “We’re on the cusp of a complete catastrophic credit meltdown. There is no liquidity in the market. We are out of time. Either you believe that fact, or you don’t. I do.”
Former Sen. John Sununu (NH) is one of the two Republican members of the TARP oversight panel. He says the program “did help to stabilize financial markets during the critical period of November and December in 2008.”
Republican primary voters are now attacking lawmakers in their own party for supporting a program that A) was created at the behest of a Republican President and B) was central to saving America from a serious depression.
The infusion of $350 billion by the Bush Administration was the best way to slow the nation’s slide to the financial edge.
The program worked and the Republicans should be glad it did.

Couldn't agree with you more, Mr. Hilton. However, the spineless republicans continue to bow down to the the dictates of the enemedia, which insists President Bush was the worst president ever and they should do everything in their power to distance themselves from him. Consequently, they claim they were lied to or at minimum misinformed. They think the American people are as stupid as they are!