Troubled Assets Relief Program: Right or Wrong
Michael J. Kneece
Midlands Technical College
ECO-210-B01
Instructor: Kenneth Craib

Troubled Assets Relief Program: Right or Wrong
In 2008, when the “Great Recession” happened, Congress passed the Troubled Assets Relief Program (TARP). The Troubled Assets Relief Program allocated over $700 billion to aid in “emergency” loans to “critical financial and other US firms”, that were considered “too big to fail.” While the Troubled Assets Relief Program was created with great intentions, it failed miserably in the sense that it stole from taxpayers dollars. Some of the major recipients of TARP funds included JP Morgan Chase, Goldman Sachs, Bank of America, Citibank and in addition to some nonfinancial firms included General Motors and Chrysler. The Trouble Assets Relief Program affected beneficiaries such as corporate, individual, congressional and individual taxpayers.
“The sadly predictable consequences resulting from the government’s desperate treatment of Wall Street and Main Street have only become worse. As the banks amass even more size and power, Main Street continues to get pummeled.” (Barofsky, 2012) As it is sad to report all the money that was spent in this bail out, when looking through the list of banks and beneficiaries, I am glad to report that the bank that I bank with; which is First Citizens Bank of Columbia, South Carolina did not have to file for bankruptcy. Committed money was over a total of $549.4 billion. Up under the Committed category here are a few of the firms that received money in large sums: Financial firms not returned $79.3 billion, Citigroup $50 billion, Bank of America $45 billion, A.I.G. $69.8 billion, Automakers such as GM & Chrysler $85.3 billion, Homeowners $50 billion, Small businesses $15 billion, Public-private $100 billion, and last of all TALF $55 billion. All of the money just mentioned has not been returned or paid back in anyway. However there is a total of $150.6 billion that is uncommitted out of the total of about $700 billion. The numbers say in the uncommitted category that there were: in the Unused money $80.5 billion and however the honest ones Returned a little over $70.1 billion. Some of these numbers show that some of the banks use the money to grow to help their self, while others were actually in a need of the money and were able to pull their self-back out and pay the money back to the government. Troubled Assets Relief Program is a great and effective Program for the small businesses that were needing help to pull their self-back out to recover in those hard times. However as it seems to always do, the bad seems to overtake and rollover the good, the businesses that were “too big to fail” should have simply failed no matter what the consequences are.
With this Troubled Assets Relief Program firms received in the sense extra money that was used as a moral hazard. Our textbook talks about a moral hazard and describes it as “The tendency for financial investors in financial services firms to take on greater risk because they assume they are at least partially insured against losses.” (McConnell, 2012) How does this relate to the taxpayer, well the taxpayers which are you and me common folks that are having to pay the government all of this money for companies to be bailed out that we might not have anything to do with. That alone sickens me personally knowing that I’m having to pay for companies poor financial mistakes. It’s also nice to know that while these companies that are being bailed out, some of the big executives are still getting nice bonuses, I love to pay for that as well. If companies have to be bailed out, then they’re not doing something right, get out of the business!
“OneAmerica believes strongly that this is a step in the wrong direction. We believe this money will be used to help public insurers, shareholders, not their policyholders and will encourage excessive risk-taking in the future. We believe there are better uses of taxpayer money.” (OneAmerica Represenative, 2009) This is an article written by OneAmerica life insurance, retirement, and employee benefits company, they boldly said “We don’t need it. We are strong.” The taxpayer money has no place in the world in the life insurance business.
The government bailouts for banks did not do much to relieve the credit crunch for main street companies. Bloomberg Businessweek says that “In fact, banks that took taxpayer money during the financial crisis of 2008-2009 cut their lending to small businesses more than other banks did.” (Tozzi, 2012) What gets me is that small business loans that were outstanding drop over 18%, from a peak of over $659 billion in 2008 to $543 billion in 2011. If the government is handing out bailouts to banks, why did our loans cut at the same time. Also the Troubled Asset Relief Program banks cut their lending to small businesses by 21%, in that compared to a 14% overall drop at the other banks that were non-TARP banks. Also when the banks received this bailout, the banks were asked to lend that money to small businesses, but they didn’t do it, instead they built-up their capital position.
As most people would agree the Troubled Assets Relief Program has not been real beneficial. This program was simply a means for the government to calm, restore peace and provide confidence in the financial market all while costing the taxpayers. I believe the government should have let the Free Enterprise system heal itself and the businesses would have been able to work the numbers instead of having to file and for what I call a “pretend bankruptcy.” My final thought on the Troubled Assets Relief Program is that it is another example of wasteful government spending. The government doesn’t have to be productive, this is another prime example of Stealing from hard-working, tax paying Americans. America cannot afford this and remain the great nation that it has always been.

Works Cited
Barofsky, N. (2012, July 24). Google EBooks - Bailout. Retrieved July 15, 2013, from Google: http://books.google.com/books?id=mUAR9wa9zzIC&dq=“The+sadly+predictable+consequences+resulting+from+the+government’s+desperate+treatment+of+Wall+Street+and+Main+Street+have+only+become+worse.+As+the+banks+amass+even+more+size+and+power%2C+Main+Street+cont
McConnell. (2012). The Treasury Bailout: TARP. In C. R. McConnell, Macroeconomics (pp. 292-293). New York: McGraw-Hill & Irwin.
OneAmerica Represenative. (2009, March 15). OneAmerica statements. Retrieved July 16, 2013, from OneAmerica Financial Partners Inc.: http://www.oneamerica.com/wps/wcm/connect/oa/oneamerica/home/news+center/press+releases/oneamerica+statement+regarding+the+troubled+assets+relief+program
Tozzi, J. (2012, November 9). Small Business. Retrieved July 18, 2013, from Bloomberg Businessweek: http://www.businessweek.com/articles/2012-11-09/tarp-verdict-a-failure-for-small-business