Last Friday, I noted that taxpayers had made money from TARP. Nobody was talking about this too much--maybe a little August-itis or attention on the Kennedy funeral. That changed yesterday, when the New York Times reported that profits from the eight banks that have fully repaid the government total nearly $4 billion. Can you hear me now?
Last fall, when then-Secretary of the Treasury Henry "Hank" Paulson and Federal Reserve Chairman Ben Bernanke conceived of TARP, the clock was ticking on the US financial system. It was a only a matter of days and weeks before both officials were lambasted by lawmakers and the public for creating a plan that rescued the institutions that got us into the mess. Whether you believe that Paulson was was a bully or a hero, the results of the initial TARP paybacks must give him some solace.
We already know that Big Ben Bernanke has been rewarded with another term for his role in helping to steer the economy during the worst crisis since the Great Depression. Adding to his props, today the Financial Times reports that the Fed has made $14 billion on a variety of activities.
Yes, this is a drop in the bucket relative to the trillions of dollars that the government has pumped into the system and I fully expect that there will be those who poo-poo the results. But given the circumstances, I would prefer that the government actually make money than lose it.
Image by Flickr User Tracy O, CC 2.0