Additional Views on What TARP Has Achieved

by Damon Silvers, for The Harvard Law School Forum at Harvard Law School, January 10, 2010.

This separate view does not reflect a disagreement with the Panel report in any respect. Rather I wish to say in a somewhat briefer and perhaps blunter way what I believe the Panel report as a whole says about TARP.

The Emergency Economic Stabilization Act of 2008 and the Troubled Asset Relief Program it created, in my opinion, were significant contributors to stabilizing a full blown financial panic in October 2008. It is clear to me that for that reason, we are better off as a nation for the existence of TARP than if we had done nothing. Of course this proposition is very hard to prove, but I am convinced it is true. Many people deserve credit for doing TARP rather than doing nothing, but three people who in particular deserve credit are Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner, and in particular, former-Treasury Secretary Henry Paulson.

Further, we are better off that, in implementing TARP, then-Secretary Paulson and his colleagues chose to do capital infusions in the form of the Capital Purchase Program rather than the initial plan of asset purchases. The prospect of asset purchases did not calm the markets, the announcement of capital infusions did. Furthermore, asset purchase at the richly subsidized prices the banks had hoped for would have been profoundly unfair to the public. Any other kind of asset purchases would certainly have had little impact on the panic and could have worsened it…(continue reading)

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