Tea Partiers Should Separate TARP from Stimulus
I’m definitely a Tea Party patriot, but I object to those tea partiers who lump together and object to both the Obama Stimulus bill (also known as the Porkulus bill) – and the TARP bill that went into effect near the end of the Bush Presidency.
The TARP bill saved our banking and economic system from complete disaster. Without it all our dollar-denominated savings would have become worthless, and we would have had inflation reminiscent of third-world countries. Retirees like me would be selling apples, and unemployment would be at Great Depression levels.
Bush’s two stimulus bills put cash directly into the hands of tax-payers and SSI recipients, and were nothing like the Obama bill, which was basically a payoff to his supporters.
I would also like to remind my readers once again that the housing bubble and collapse was the direct result of liberal policies to grant home-ownership to deadbeats – and the resulting fraud and corruption that follows every government give-a-way.
TARP saved us from a second 9/11
By Glenn Ayers November 17, 2009 TheTimesNews
The results of the Nov. 3 elections in Virginia and New Jersey indicate, not so much a shift in party alignment, as they do an electorate seething with dissatisfaction in governmental action. The “experts” are saying the “action” at issue is the recent whirlwind spending on crises that treat billions and trillions of dollars as numbers with no meaning.
While that is a serious concern, it’s important that citizens recognize the distinction between each crisis and which is or is not, vital. For instance, the allocations of 2009, such as the stimulus package and potential health care, may possibly be desirable and important, but the one in 2008 — TARP — was imperative and nation-saving. It could be called a “second 9/11” with good reason, according to my research through the New Yorker, the Wall Street Journal and Christian Science Monitor.
Late in the afternoon, on Thursday Sept. 11, 2008, Tim Geithner, governor of the Federal Reserve in New York, phoned Fed Chief Ben Bernanke in Washington. His message was ominous. The large investment bank — Lehman Brothers — was unlikely to be able to open on Monday.
Though the news was not wholly unexpected —Treasury Secretary Hank Paulson had been urging Lehman’s president, Robert Fuld all summer to find a buyer — it was still terrible. After the Bear Stearns, Fannie Mae and Freddie Mac debacles, the news would be more than unsettling to both Wall and Main streets.
Additionally, the conceivable repercussions in the world-wide financial markets could be disastrous. Leveraged at 30 to 1 ($30 in debt for every $1 in assets), Lehman looked hopeless as panic spread among its investors. Paulson, Bernanke and Geithner circled the wagons on Friday for a week-end spent trying to save Lehman. They little knew that worse news was yet to come.
Another 9/11? It certainly seemed so when Paulson learned next day of a liquidity crisis at A.I.G., the huge insurance conglomerate. It was growing from a cash hemorrhage owing to redemption of the company’s “credit-default” swaps, a situation that would require $39 billion in a very short time.
Meanwhile, the week-end’s non-stop efforts to save Lehman failed. Paulson, Bernanke and Geithner had reasoned that without a buyer, the government could not put money in to guarantee the transaction as they had when JPMorgan Chase took over Bear-Stearns. There was no legal authority to simply nationalize an investment bank. Unable to find a buyer, Lehman filed for bankruptcy Sunday afternoon before the fateful Monday.
Paulson received overwhelming congratulatory messages from public and private sources for showing that no business was too big to fail. It was a hollow and short-lived glory, however, for there was one out there that was too big — A.I.G.
It wasn’t just an investment bank, but an insurance company whose business was backing securities globally. Its name, “American International Group,” said it all. Letting A.I.G. collapse could be devastating. They were larger then Lehman, with a substantial presence in derivatives and debt markets as well as insurance markets. Assessing the situation, Paulson told Bernanke it was time to see the president.
After the meeting, with President Bush’s blessing, they went on with the salvation efforts that would eventually become the “Troubled Assets Relief Program” (TARP) that essentially devoted $700 billion to ensure money market funds. By the time it was over, Merrill-Lynch would be absorbed by Bank of America; Goldman Sachs with $5 billion from Warren Buffett and Morgan-Stanley with $9 billion from a Japanese bank became bank holding companies.
In the end, the two best players from the government—paradoxically Bush and Rep. Barney Frank (who lobbied TARP through Congress after its initial failure) had this to say.
BUSH: “…tell me how we ended up with a system like this … we’re not doing something right if we’re stuck with these miserable choices.”
FRANK: “You can’t go out and shoot the bankers. You can’t have an economy without a functioning credit system. People are angry. They’re furious. But you have no option but to live with these people.”
TARP unquestionably prevented plunging into a global economic abyss. Recession, unemployment, uneven credit, onerous debt and a weak dollar still exist, but are nothing compared to what whistled past America’s ear, 9/11/08.