End of TARP

An op-ed in the Financial Times, How an unloved bail-out saved America.

"America’s troubled asset relief programme – better known as Tarp – died on Sunday, at the age of two. The causes of death were bitter politics and financial illiteracy. Hatched in the post-Lehman bankruptcy panic, Tarp allowed Barack Obama, US president, and his predecessor, George W. Bush, to bypass laborious Congressional approval and deploy $700bn to rescue a collapsing financial system. In its short life Tarp soon became the programme that everyone loved to hate.

To conservatives it epitomised the meddling nature of a bail-out nation. To liberals it rewarded the same Wall Street financiers who took the economy down. And Congress quickly recognised that flexible Tarp capital was precisely the opposite of what the legislative body likes to do, which is to micromanage funding requests, not issue blank cheques. But instead of euthanising Tarp we should be eulogising it as, without exaggeration, this legislation did more to keep America’s financial system – and therefore its economy – functioning than any passed since the 1930s."