Almost alone among progressives, I supported the original TARP bailout and told people that it was working in its primary purpose which was to prevent an epic depression-like collapse of the American and global economies. A lot of people made some pretty dire predictions, but they’re not talking so loudly these days. Without the bailouts, you certainly would not be seeing this:
If the economy produces jobs over the next eight months at the same pace as it did over the past four months, the nation will have created more jobs in 2010 alone than it did over the entire eight years of George W. Bush’s presidency.
The time to address the systemic risk inherent in the economy was not during the moment of greatest anxiety, but now, with calmer heads. We just needed to be patient. There is good momentum on the Wall Street reform bill, and it may be strengthened even more before passage.
However, I don’t expect anyone to like what happened with the bailout. Propping up megabanks that acted irresponsibly and cost people their jobs and life savings is not a fun thing to do. That’s why the Republicans who voted for the bailout are gun-shy about taking credit for the result. And it’s also why progressives are still in denial that the wretched thing worked.
You can give me all the “yes, but” arguments you want about how things could have been better or fairer, or tell me how much risk remains in the system, but the bottom line is that ‘yes.’ Yes, the bailout worked. The Masters of the Universe tried to destroy everything, and they did not succeed. Some Republicans will admit as much:
Sen. Judd Gregg (R-NH), who’s retiring at the end of the year and is therefore unencumbered by the need to defend himself from the GOP base, has nothing to run away from.
“It was extremely effective,” Gregg told me. “Not only was it effective and stabilized the financial industry, it also returned to the taxpayers almost $20 billion in interest and dividends that they would have otherwise not have.”
But, the common answer on both the left and the right came from John McCain:
“It’s not been effective because they deceived the American people,” McCain said. “They said it would go to address the housing issue instead they gave it to the financial institutions. It’s been well documented that it was sold to the American people as going to address what caused the crisis–that was the housing market–we gave $10 billion to Goldman Sachs. Goldman Sachs doesn’t have anything to do with the housing market…. They lied to the American people.”
The illogic in that statement tells you everything you need to know. McCain is essentially telling you that the painting is not hung on the wall because you said you were going to use a hammer to hang it but you used a screwdriver instead. Whether you misled someone or not, the painting is still on the wall. And there is the stunning dishonesty involved in saying that Goldman Sachs has nothing to do with the housing market.
In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.
Yeah, peddling $20 billion a year worth of mortgage backed securities is “nothing to do with the housing market.” Of course, it’s not surprising to see that John McCain is financially illiterate. He proved that during the crisis when he suspended his campaign to focus on the economy and had nothing to say.
The entire financial sector set up a house of cards to enrich themselves and in a just world they’d all hang by their balls. But in the real world, responsible leaders had to stop the bleeding before they could clean up the mess. Kind of like that oil geyser on the floor of the Gulf of Mexico.
