Last year, after seeing former Treasury Secretary Hank Paulson trying to defend the TARP bailout he designed, I wrote that he should go away in shame.
After all, even former Fed Chairman Paul Volcker recognized there was a much better, non-corrupt, way of recapitalizing the financial sector – what is known as FDIC resolution.
I’m now even more disappointed that the former Vice President, Dick Cheney, defended the TARP bailout in his memoirs.
Former Vice President Dick Cheney anticipated the conservative uproar over the 2008 Wall Street rescue package, and he writes in his new memoir that the Bush administration “briefly” considered not seeking congressional authorization for the $700 billion bank bailout. …The former vice president writes that he signed on immediately to the plan devised by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, despite his reservations about the intense government intervention into the financial sector. “There was no other option,” Cheney writes in the memoir, In My Time.
But Cheney is completely wrong. There was another option. The FDIC-resolution approach, which was basically how the government handled the S&L crisis about 20 years ago, was the right policy.
And I must have talked to about 10 people in the Bush Administration in September 2008, trying to get them to go with that approach.
I was told that wasn’t possible since congressional approval would have been needed to increase the FDIC’s financial resources. Knowing that the White House was going to ask for something (and fearing they would do something really bad), I responded that they should seek that authority.
As was usual during the Bush years, my fears were justified. My advice was ignored and the Administration chose the corrupt and damaging approach – an approach the Obama Administration has happily continued.
[…] subsidies to their cronies, campaign contributors, and political supporters (including not just Wall Street, but also auto companies, cities, health insurance companies, imprudent homeowners, Fannie […]
[…] subsidies to their cronies, campaign contributors, and political supporters (including not just Wall Street, but also auto companies, cities, health insurance companies, imprudent homeowners, Fannie […]
[…] P.P.S. In addition to being wrong about the cause of the 2008 crisis, my left-leaning friends also were wrong about the proper response to the crisis. […]
[…] Our real challenge is redistributionism. Far too many people think it is okay to use the coercive power of government to obtain unearned benefits. And that’s true whether the benefits are food stamps or bailouts. […]
[…] Our real challenge is redistributionism. Far too many people think it is okay to use the coercive power of government to obtain unearned benefits. And that’s true whether the benefits are food stamps or bailouts. […]
[…] Our real challenge is redistributionism. Far too many people think it is okay to use the coercive power of government to obtain unearned benefits. And that’s true whether the benefits are food stamps or bailouts. […]
[…] too many people accept the establishment’s flawed narrative about TARP – and plenty of Republicans have aided and abetted this false […]
[…] is the right policy. Too bad many GOPers ignored this bit of wisdom and voted for […]
[…] bottom line is that a lot of establishment figures, including GOPers like Dick Cheney and Mitt Romney, argue that TARP was necessary because the financial system needed to be […]
[…] bottom line is that a lot of establishment figures, including GOPers like Dick Cheney and Mitt Romney, argue that TARP was necessary because the financial system needed to be […]
[…] much attention to the topic of what should have happened once big institutions became insolvent. Defenders of TARP argued that the bailout was necessary to “unfreeze” financial markets and prevent an […]
[…] TARP […]
[…] TARP […]
[…] Our real challenge is redistributionism. Far too many people think it is okay to use the coercive power of government to obtain unearned benefits. And that’s true whether the benefits are food stamps or bailouts. […]
[…] First, I hate it when the rich and powerful use the coercive power of government to screw ordinary people. That’s one of the reasons I hated the TARP bailout. […]
[…] it’s the opposite of the corrupt TARP system that the Bush and Obama Administrations imposed on the American […]
[…] Our real challenge is redistributionism. Far too many people think it is okay to use the coercive power of government to obtain unearned benefits. And that’s true whether the benefits are food stamps or bailouts. […]
[…] Our real challenge is redistributionism. Far too many people think it is okay to use the coercive power of government to obtain unearned benefits. And that’s true whether the benefits are food stamps or bailouts. […]
[…] First, I hate it when the rich and powerful use the coercive power of government to screw ordinary people. That’s one of the reasons I hated the TARP bailout. […]
[…] First, I hate it when the rich and powerful use the coercive power of government to screw ordinary people. That’s one of the reasons I hated the TARP bailout. […]
[…] taxpayers are on the hook to compensate depositors when the liquidation occurs. This is what is called the “FDIC resolution” approach in the United […]
[…] to bail out profligate governments, and I have the same skeptical attitude about bailouts for mismanaged banks and inefficient car […]
[…] to bail out profligate governments, and I have the same skeptical attitude about bailouts for mismanaged banks and inefficient car […]
[…] going to re-capitalize the banking system (whether using the good FDIC-resolution approach or the corrupt TARP approach), then it seems that Presidents shouldn’t get arbitrary blame or credit simply because some […]
[…] Last but not least, Professor Jeffrey Sachs of Columbia University was a statist, as one would expect based on what I wrote about him last year. We clashed the most, arguing about everything from tax havens to the size of government. Interestingly, we both said nice things about Sweden, but I was focusing on policies such as school choice and pension reform, while he admired the large public sector. But I will admit he was a nice guy. We sat next to each other and did find a bit of common ground in that we both were sympathetic to the way Sweden dealt with its financial crisis about 20 years ago (a version of the FDIC-resolution approach rather than the corrupt TARP bailout approach). […]
[…] which is why it is doubly counterproductive when Republicans support policies and programs such as TARP, the Export-Import Bank, agriculture subsidies, and Fannie Mae/Freddie Mac […]
[…] to bail out profligate governments, and I have the same skeptical attitude about bailouts for mismanaged banks and inefficient car […]
[…] going to re-capitalize the banking system (whether using the good FDIC-resolution approach or the corrupt TARP approach), then it seems that Presidents shouldn’t get arbitrary blame or credit simply because some […]
[…] Last but not least, Professor Jeffrey Sachs of Columbia University was a statist, as one would expect based on what I wrote about him last year. We clashed the most, arguing about everything from tax havens to the size of government. Interestingly, we both said nice things about Sweden, but I was focusing on policies such as school choice and pension reform, while he admired the large public sector. But I will admit he was a nice guy. We sat next to each other and did find a bit of common ground in that we both were sympathetic to the way Sweden dealt with its financial crisis about 20 years ago (a version of the FDIC-resolution approach rather than the corrupt TARP bailout approach). […]
[…] going to re-capitalize the banking system (whether using the good FDIC-resolution approach or the corrupt TARP approach), then it seems that Presidents shouldn’t get arbitrary blame or credit simply because some […]
[…] many times about the foolishness of bailing out profligate governments (or, for that matter, mismanaged banks and inefficient car […]
[…] Last but not least, Professor Jeffrey Sachs of Columbia University was a statist, as one would expect based on what I wrote about him last year. We clashed the most, arguing about everything from tax havens to the size of government. Interestingly, we both said nice things about Sweden, but I was focusing on policies such as school choice and pension reform, while he admired the large public sector. But I will admit he was a nice guy. We sat next to each other and did find a bit of common ground in that we both were sympathetic to the way Sweden dealt with its financial crisis about 20 years ago (a version of the FDIC-resolution approach rather than the corrupt TARP bailout approach). […]
[…] guess the analogy is Bush and the other GOP statists supporting corrupt policies such as TARP, which helped pave the way for Obama to get […]
[…] now become more and more obvious that there was a much better alternative (as I explained in this post giving Cheney a kick in the pants), involving a process known as FDIC […]
[…] was he urging the elimination of the culture of bailouts and cronyism in the financial services […]
[…] was he urging the elimination of the culture of bailouts and cronyism in the financial services […]
[…] of this underscores why TARP was such an unmitigated disaster – and why we should be suspicious of politicians like Romney and Gingrich who supported the […]
[…] you won’t be surprised to learn that I’m opposed to bailouts. I’m against bailing out banks. I’m against bailing out car companies. I’m against bailing out […]
[…] Europe’s political class claims that bailouts are necessary to prevent a repeat of the 2008 financial crisis, but this is nonsense – much as American politicians were lying (or bamboozled) when they supported TARP. […]
[…] video largely focuses on American policy issues such as Fannie, Freddie, and TARP, but the principles apply to all bailouts. LD_AddCustomAttr("AdOpt", "1"); […]