‘Abysmal Failure’

Posted on | July 27, 2012 | 22 Comments

That’s how the 2008 TARP bailout is described by Neal Barofsky, the former special inspector general (“SIGTARP”) who was responsible for investigating how the funds were spent.

Did you know, for example, that the Treasury Department still owns 61% of the “too-big-to-fail” insurance giant AIG, and that bailout recipients still owe taxpayers more than $100 billion?

Those are a few of the unpleasant facts Barofsky details in his new book, Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.

Before TARP failed as policy, it first failed as politics, with John McCain’s panicky announcement — Sept. 24, 2008 — that he would fly back to Washington to push for passage of the bailout. As I explained two weeks later, this was the decision that ensured Obama’s election:

An L.A. Times poll found 55 percent opposed a taxpayer-funded financial bailout; an Associated Press poll found only 30 percent supporting the plan proposed by Treasury Secretary Henry Paulson.
Why such widespread opposition? According to a CNN poll, 77 percent believed the bailout would benefit those who had caused the financial problems in the first place.
As with immigration reform in 2006 and 2007, McCain’s pro-bailout stance made him the most prominent advocate of an unpopular proposal. His attempt to push for quick passage of the measure was rebuffed. A Sept. 25 White House conference reportedly turned into a “contentious shouting match,” and the bailout bill was defeated Sept. 29 in the House, with most Republicans voting against it. . . .
[B]y siding with [Bush] on an issue that voters identified as favoritism toward Wall Street, the Republican cemented in the public mind a message that Team Obama had been promoting for months: A vote for McCain would mean a third term for George W. Bush. . . .
It was McCain’s outspoken support for the unpopular bailout — a big-government intervention incompatible with conservative economic philosophy — that handed the election to Obama.

Michelle Malkin was among the most outspoken conservative opponents of the bailout, and deserves credit for having been right when so many Republicans — not just John McCain — were wrong.

Obama also supported the TARP bailout, and every other bailout and “stimulus” that Democrats could come up with, and what did taxpayers get for all those billions? Not a recovery. (Hat-tips: Instapundit, Memeorandum.) Reacting to today’s bad economic news, Mitt Romney’s policy director Lahnee Chen issued this memo:

This Sunday marks 100 days until Election Day. Poll after poll shows us that jobs and the economy are the most important issues on the minds of the American people. Voters will be asking themselves a simple question: Which candidate is best equipped to finally get our economy back on the right track?
Under President Obama, the economy continues to weaken. Today’s GDP estimate, which revealed that our economy grew by a paltry 1.5% last quarter, is only the latest sign that we are moving in the wrong direction. Some economists have expressed fears that we are heading toward a period of zero growth — or worse. America’s jobless rate has been over 8% for 41 straight months and is likely to remain chronically high for the foreseeable future. The number of Americans living in poverty is at record levels. China has overtaken the United States in manufacturing for the first time ever. All the while, our national debt climbs higher and higher, leaving a multi-trillion dollar unpaid bill for future generations.
President Obama has no one but himself to blame for the state of our economy. Shortly after taking office, he promised to turn things around in three years or he’d be looking at a “one-term proposition.” He said he welcomed the responsibility of solving the serious problems our country faces. But he has not solved them. Now, instead of solutions and substance, the Obama campaign will offer little more than diversions and distractions over the next 100 days. Since the President can’t run on his record, this is all his campaign can do.
Americans are too smart — and too tired of politics as usual — to be fooled by this. They know President Obama has had enough time to live up to the promise of his last campaign. They know they aren’t better off than they were four years ago. Most importantly, they know they have the final say — and a clear choice.
In Mitt Romney, the American people will find someone who has the kind of personal strengths and professional experience they are looking for. As a businessman, and later as governor, he compiled a record of promoting innovative solutions, turning around struggling enterprises, and creating jobs. Unlike President Obama, he has a comprehensive plan to unleash the potential of the American economy and give hope to middle-class families that are struggling. He knows the power of free enterprise and free people — and he believes small-business owners and entrepreneurs deserve every last bit of credit for serving as the backbone of America’s economy.
From Day One of his presidency, Mitt Romney will be focused on job creation and economic growth. He will lead where President Obama has not, and he will succeed where President Obama has failed. Just over 100 days from now, the change we need will finally arrive.

Category: Economics

Comments

22 Responses to “‘Abysmal Failure’”

DaveO
July 27th, 2012 @ 7:02 pm

Who could have foreseen this?

Regardless, in the spirit of ‘unifying the Nation,’ Romney will neither conduct a complete, forensic audit of TARP and the Stimulus, nor publish the results of such an audit online.

THAT would be a great disinfectant. It would also lead to armed insurrection in our streets, but given the level of violence these days, whose to say we aren’t seeing Progressives revolting?
Mortimer Snerd
July 27th, 2012 @ 7:31 pm

McCain was hardly the only Republican who supported the TARP bailout. Romney did, too. I think. Although to watch him speak about it leaves your head spinning:
Bob Belvedere
July 27th, 2012 @ 8:12 pm

John McCain: The Original SCOAMF!
jefferson101
July 27th, 2012 @ 8:19 pm

Yeah. A Miserable Failure from the SC in charge of them. What more can you say about the current Administration?
Adjoran
July 27th, 2012 @ 8:57 pm

Congress and Treasury overreacted, without doubt. The initial $350 billion TARP I was more than enough to do what was needed; the second installment was entirely unnecessary and entirely wasted.

Recall that Paulson forced several of the major banks to take bailouts they didn’t need or want in order to save those who did from a market reaction. Whether or not that was a good idea is certainly debatable, but it was of doubtful legality.

However, we were on the cusp of an international financial meltdown which was almost entirely the fault of irrational government actions. Beginning with forcing the banking industry to make mortgage loans to unqualified buyers, through subsidizing the practice with Fannie and Freddie, failing to require mortgage securities be transparent about just what sort of instruments were in them, and finally with the insane “mark to market” rule which created an instant capitalization crisis once the scam became known, it was a disaster authored, promoted, and forced on the financial industry by the federal government.

It is quite easy to say, after the crisis was averted, that it was not necessary to avert it.
Evi L. Bloggerlady
July 27th, 2012 @ 9:00 pm

It was not just supporting TARP, but how he reacted that lost the election. McCain seemed panicked. Obama seemed cool and calm (part of that in hindsight was he did not even realize what was going on and McCain at least had enough sense to realize things were bad) but public perceptions matter.
K-Bob
July 27th, 2012 @ 9:14 pm

I remember Michelle Malkin’s solution before the bailout proposal at the time. It was perfect: Suck. It. Up.
Things I Missed While Attending to Things Obama Thinks We Didn’t Build | The Lonely Conservative
July 27th, 2012 @ 10:13 pm

[…] Holder has taken it upon himself to designate banks as racist. What a go-getter!Is it racist to characterize the TARP bailouts as an abysmal failure?Do you live in the suburbs? If so, Obama hates you. Apparently, so does my RINO County Executive. […]
smbren
July 27th, 2012 @ 10:32 pm

All of this is fact. We knew all about it. We knew what the outcome would be. How in the heck do we reach the uninformed? I cannot even express to you in print the number of uninformed individuals in my workplace. Not only are they uninformed, this bright Americans just plain don’t care…..My grandfather used to say “some people will just not pay attention or realize what is going on, until they have absolutely no freedom, and no hope in getting it back.” All the resources at their finger tips and they choose not to engage.. It absolutely boggles the mind.
Adobe_Walls
July 27th, 2012 @ 11:11 pm

I submit the jury is still very much out on whether or not disaster has been averted.
Shawny
July 28th, 2012 @ 8:46 am

Nearly 4 years out the jury of even the most positive economists is in and the news is that disaster has not been averted, merely postponed. In addition, the congressional oversight committees have still yet to obtain information on where billions actually went so they aren’t sure what or who was being bailed out with it. We only know it wasn’t us and now the CME and NFA have confirmed it isn’t going to be if you’re a shareholder anyway.
Shawny
July 28th, 2012 @ 8:50 am

You’re right. But just like the corrupt government, many of the American people want to continue with the unsustainable status quo so many are trying to convince them isn’t already irretrievably broken.
Shawny
July 28th, 2012 @ 8:57 am

Hard to choose between who’s the bigger traitorous POS between “Mr. Indefinite Detention” McCain and “Mr. Let’s Piss On The Constitution” Obama.
Shawny
July 28th, 2012 @ 9:02 am

Oh baby! That’s too big an opening. Even my 80 year old mama uses language to describe this administration I’d have gotten my mouth washed out for.
Shawny
July 28th, 2012 @ 9:08 am

One would think that exposing the truth would work that way but it hasn’t yet and some of those exposures have been magnificent. I don’t think some folks are going to come to the party until the economy finally collapses or martial law is declared.
CPAguy
July 28th, 2012 @ 11:58 am

TARP has worked well for the American Financial Sector while it was folly to expand it beyond that to things such as the auto industry. In fact, while it has been an overall boon for the nation’s economic health, it was inefficient in that it attempted to micro-manage the financial sector and did dumb things such as making AIG pay off counter parties 100% on its failed derivative products…which was counter intuitive and costly to taxpayers and AIG…only benefiting Goldman Sachs.

For example, the government is making a profit on the AIG investment. Doesn’t matter that it still has a stake in the company. AIG is back to profitability and remains the biggest insurance company in the world…and remains based in the United States.

The Credit Crisis was largely caused by government interference in the financial markets.
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July 28th, 2012 @ 5:14 pm

[…] Other McCain | Abysmal Failure That’s how the 2008 TARP bailout is described by Neal Barofsky, the former special inspector […]
pointsnfigures
July 29th, 2012 @ 10:04 pm

I was against the bailout as well. http://pjmedia.com/blog/treasury-secretary-looks-out-for-his-buddies-first/

Congressman that voted against it are looking smart these days. Someday, we will look back at Congressman that voted against Obamacare and Dodd-Frank as similarly smart.
Ken Watson
July 29th, 2012 @ 10:59 pm

Yeah, and revisionism to the contrary he was also for the auto bailout. Well, he was for AN auto bailout. He is a slippery weasel. Sure has been making soothing noises lately though. Is our great hope that he is a man without convictions and therefore will do what needs doing in an effort to differentiate himself from Brand O? Could well be.
Blacque Jacques Shellacque
July 30th, 2012 @ 1:25 am

“It was McCain’s outspoken support for the unpopular bailout — a big-government intervention incompatible with conservative economic philosophy — that handed the election to Obama.”

Well, John McCain isn’t exactly a conservative…
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July 31st, 2012 @ 9:01 am

[…] probably wouldn’t have panicked like McCain did: “Before TARP failed as policy, it first failed as politics, with John McCain’s panicky […]