U.S.Treasury Secretary Timothy Geithner took to The Washington Post opinion pages this past Sunday to address what he calls five myths about the Troubled Assets Relief Program, known by its acronym TARP.
TARP has become broadly unpopular in the country, but Geithner and other Obama administration leaders have been working lately to get out the news that TARP will ultimately result in a much smaller cost to taxpayers than is popularly believed:
[T]he cost of the TARP, which succeeded in reducing the overall economic damage, will be considerably lower than once feared. In fact, the direct budget cost of the program and our full investment in the insurer AIG is likely to come in well under $50 billion -- $300 billion less than estimated by the Congressional Budget Office last year. And taxpayers are likely to receive an impressive return (totaling tens of billions) on the investments made under the TARP outside the housing market.
Even looking beyond the TARP to the losses associated with Fannie Mae and Freddie Mac's pre-crisis mistakes, the direct costs of the government's overall rescue strategy are likely to be less than 1 percent of GDP. By comparison, the much less severe savings and loan crisis of the late 1980s and early 1990s cost 2 1/2 times that as a share of our economy.
In the article, Geithner addresses other concerns of critiques, such as that TARP helped Wall Street and not Main Street, that it led to greater presidential control over the economy, and other claims.
Read his entire article here.
Bring your own questions for the Treasury secretary when you see Timothy Geithner live at The Commonwealth Club of California this Monday, October 18, in Palo Alto for a 1:00 p.m. program. Details and ticket information are now available.