INDY500
Rock n' Roll Doggie Band-aid
Take a look at the run on the banks that led to the Great Depression. It was the Government's non-involvement that exacerbated the lack of confidence in the banking system, and led to the greatest economic downturn in history. There is no question that without TARP, things would have been much, much worse today.
It was also the government's involvement that prolonged the depression until, basically, WWII came along.
One can certainly make these arguments in favor of TARP:
1) It did begin under Bush
2) We were facing a possible financial meltdown.
3) (Attention OWS) The banks have paid back the TARP money. The Congress then wasted it rather than returning it to the treasury.
Against TARP:
1) It has set a terrible precedent as we go forward facing bankruptcies in industry (Airlines, newspapers), foreign banks failing in a globalized economy and even state and municipality defaults. There will be enormous political pressure for federal bailouts.
2) Post-TARP the "too big to fail" banks have only grown larger.
To give you a look at where things were heading, after the Lehman Brothers bankruptcy, credit markets froze. There was an evaporation of trust. Banks stopped lending. Forget Wall Street, even the behemoth GE was having trouble meeting it's short term financing, and would have certainly gone under had it not been for TARP. There was a chance that McDonald's was not going to be able to pay it's workers in the next week because it couldn't access short term financing.
Well now you introduce the 3rd problem with TARP:
3) Smaller banks that do the majority of local lending to businesses can't compete against the large banks and their preferential rates. My bank, founded in 1880, was forced to merge just this year.
All in all, we needed a restoration of trust in the banking system, and the only party that was large enough to take action was the U.S. Government. It's silly to think that the affect of free markets can't be proven, because the Great Depression is a perfect example that disproves anyone who thinks government should have stayed out of it. All this anti-TARP talk coming from most of the Republican candidates is designed to appeal to the stupidity of the American public.
I agree in that I tend to favor the argument that TARP was needed but also that it was badly managed (too much power given to Bernanke, not enough concessions from banks in regards to bonuses, reforms and breaking them up).
Good debate. You've studied the issue.