Government

TARP: Widely Reviled, Cheaper Than Expected

TARP, the big bailout program created in late 2008, is likely to be a lot cheaper than people expected just a few months ago. At the same time, TARP is still widely unpopular, this morning's NYT notes. Oddly enough, these two facts may be related.

The program — which gave the government the authority to spend $700 billion on bailouts — is set to expire this weekend.

The White House said this week that the ultimate cost to the government will likely be $50 billion or less. The (nonpartisan) CBO recently estimated the final cost at $66 billion, down from an estimate of more than $100 billion earlier this year.

These declining estimates are largely due to the fact that the big financial companies that received a big chunk of TARP money are actually doing pretty well.

The big banks have paid off their TARP money, with interest (though some smaller banks have not). And AIG yesterday announced a plan that actually gives the government a good chance of getting paid back in full.

At the same time, though, the broader economy remains in bad shape, with high unemployment and a mess of a housing market.

This juxtaposition seems to be driving a lot of the TARP-related anger: The big finance companies at the heart of the financial crisis got bailed out and are doing fine, while regular people are still struggling.

Even backers of TARP agree that this is not just. But, they argue, if the big financial companies hadn't been bailed out, the financial system would have collapsed and ordinary people would be even worse off than they are today.

"It wasn't fair," Tim Geithner said recently, according to the Washington Post. "But it was necessary."

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