The TARP bailout is considered one of the great disasters of modern American history. A number of causes, most notably the subprime loan fiasco, pushed the American economy to the brink of Armageddon. Economists predicted we were facing the next Great Depression. Something had to be done and done quickly. |
Then-President George W. Bush responded by passing the TARP bailout. TARP stands for Troubled Assed Relief Program. It was designed to lend a lot more money to the banks and lending institutions that got us into this mess in the first place. It was passed in October 2008, and its provisions were implemented by new President Barack Obama.
Everything looked like doom and disaster, but two years later, things aren't looking so bad. In fact, it looks like ordinary Americans are going to benefit from the TARP bailout. How can this be? Here are some of the reasons.
Let's Look At The Books
First off, what was considered by most people to be a disaster in the making has somehow shown itself to be a success. They thought they'd pump this money into the lenders and that they'd get a return on their investment. And that's exactly what happened. As of today, 2/3 of that money's been repaid. In other words, American taxpayers paid for it, but we're getting our money back.
The US government doesn't get it all back; it loses $90 billion on the deal. That may sound like a lot to you, but to Uncle Sam it's a drop in the bucket. The TARP bailout did a lot better than the Savings and Loan fiasco of the 1980's, and that was considered a roaring success.
Leftover Funds Will Be Used To Benefit Americans
The democrats are already discussing what to do with these returned funds. The plans on the table right now involve using the money to help with America's many problems domestically. Ideas include using it to stimulate job growth, repair the nation's infrastructure or strengthen health benefits. Of course, there is some opposition to this among the newly elected senators and congressmen, but it sounds likely to be put into effect.
It Rescued Companies And... Maybe Saved The Economy?
Nobody knows exactly whether it really worked or not, and we have no idea what would have happened if we hadn't had the TARP bailout. But one thing is for sure - a whole list of major American companies are now alive and kicking, whereas they would've otherwise been dead and buried. With companies like General Motors saved, it's likely that this will trickle down to ordinary Americans in the form jobs. By saving a company like GM, many economists predict that we saved the entire auto industry, and Americans should be happy about that.
Good Returns On Investments
Finally, part of the deal was to keep banks' interest rates low in order to pay off debt. This allows them to borrow and invest in projects. This means that bonds are up. Another effect of the TARP bailout is that the stock market is much higher than it was 2 years ago - it was around 7,000 and today it closes at 11,000.
Today, things are very politically charged. The TARP bailout is seen as a useless waste of taxpayer money by a party (the democrats) who throw endless money at every problem. But let's keep in mind two things - one, it was passed by a republican president; and two - it just may have benefitted me and you.
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