TARP Should Not Be Extended – WSJ.com

Posted by Jason | Posted in Government | Posted on 27-10-2009

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Are we really going to hand over health care to a government who enslaves our future generations to bail out their buddies on Wall Street? TARP was sold as a bailout of banks in respect to freeing up credit. It turned out to be a slush fund to spread the wealth around to the wealthy.

The Troubled Asset Relief Program will expire on December 31, unless Treasury Secretary Timothy Geithner exercises his authority to extend it to next October. We hope he doesn’t. Historians will debate TARP’s role in ending the financial panic of 2008, but today there is little evidence that the government needs or can prudently manage what has evolved into a $700 billion all-purpose political bailout fund.

We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC’s shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn’t need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.

TARP was then redirected well beyond the financial system into $80 billion in “investments” for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no “systemic risk.” They erode slowly as customers stop renewing policies.

TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.

via TARP Should Not Be Extended – WSJ.com.

Those who love the government and think they will serve justice up on a platter of compassion, need look no further than the scam of TARP that was pulled on the American public. I’m sure the Wall Street Journal was all for the bailouts, and now they say the government didn’t enforce discipline. How do you force discipline on companies by bailing them out. The free market delivers discipline by the prospect of failure. When that failure option is removed by the government, discipline goes with it. This is a great lesson in A) don’t trust the government when it tells you something has to be done right away or society will suffer and B) government would sell your children in to slavery quicker than you can say TARP if that is what it takes to bailout their buddies. Don’t believe me, that is exactly what they did.

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