TARP First Birthday Brings Debate On Its Success

The Troubled Asset Relief Program is commonly known as TARP. It was initiated during the economic crisis last year to sure up the banking industry.

TARP was quickly deemed as a bailout for banks. The fact that the program helped the same companies that many blame for causing the financial collapse is one of the many reasons why TARP has been criticized from its beginning.

A year later there are some that now claim that taxpayers could lose up to a possible $200 billion.

They base this estimates on the fact that not only are many of the banks not paying back the bailout as they are suppose to, but that TARP has been used for other trouble companies outside of the banking industry.

TARP only had to pay out $450 billion of the $700 billion approved to the banks. The rest of the money has been given to other industries such as the automobile makers, the Making Home Affordable program, and companies like AIG.

Some of the banks that received some of the TARP bailout money have begun paying back the money they received. Many have not. Many of them, such as Bank of America are still having trouble.

Other banks are doing better but are still not making the payments they are suppose to be making. One such bank is Fidelity Bank based out of Atlanta. CEO Jim Miller recently told the Atlanta Journal-Constitution that while the program had been tremendous for the bank, they were in no hurry to pay the money back. Wonder if the bank would accept that from their customers?

GM and Chrysler both have received billions of dollars in loans from the government over the past year. Despite these loans and the cash for clunkers program that both automakers did not do very well with, neither GM nor Chrysler has shown their financial outlook is improving.

While the Making Home Affordable program is designed to help homeowners stay in their homes and avoid foreclosure, the government will not be paid back any of the money back. It is estimated that the program will pay out $50 billion.

Many of those that support TARP claim that the program has worked and that it possibly could have even prevented another Great Depression. Supporters state that the money given out by TARP prevented a further collapse of the economy. They claim jobs were saved and credit sources continued to flow.

Critics claim that TARP failed to address the issues that caused the economic problems in the first place and that there is a good chance the problems will develop again. They also criticize that the government gave out money, possibly up to $200 billion, that the taxpayers will never see again.

It will be debated for a long time as to if TARP was a success or a failure. Time will tell how many of the companies that received bailout money manages to survive. It will also be interesting to see how much of the TARP $700 billion is paid back.

Written by Denise Clay
Hickory, NC
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