One of the establishment outrages that led to the middle class rebellion now known as the Tea Party was the $700 billion TARP program that bailed-out a select group of Wall Street and international banks from their bad bets on the U.S. housing market.
Former Massachusetts Governor Mitt Romney and former Godfather’s Pizza CEO and Kansas City Federal Reserve Bank Member Herman Cain’s defense of TARP was one of the few moments during The Washington Post – Bloomberg News debate that reminded us what is at stake in the 2012 election.
Defending TARP should burst Herman Cain’s populist bubble, but Romney in particular, defended the 2008 bank bailout in one of the most disingenuous statements of the evening, if not the entire debate cycle.
According to Governor Romney, the $700 billion Wall Street rescue package "was designed to keep not just a collapse of individual banking institutions, but to keep the entire currency of the country worth something."
Noting could be further from the truth and Romney knows it.
TARP was not sold as a program to prop-up the dollar; it was sold as a means of keeping credit markets liquid, to keep banks lending to business, so businesses would keep people employed.
Not surprisingly, from that perspective TARP has been a spectacular failure -- because as soon as Congress granted then-Treasury Secretary Henry Paulson a blank check for $700 billion (along with near-dictatorial powers over the American financial services industry and de facto control over the U.S. economy), something changed.
Suddenly, instead of being a program to move illiquid mortgage-backed securities off the books of banks, TARP became a no-strings-attached cash infusion to favored financial institutions and corporations.
Among the insiders who received the no-strings-attached cash were Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group – that’s what Romney and Cain were defending.
But it gets even better for the establishment politicians, like Romney and Cain, who helped get TARP passed. As documented by Newsweek and other media outlets, much of this money was recycled back as PAC contributions to the very politicians who voted for TARP and sit on the committees responsible for financial services-related legislation.
In defending TARP, Romney and Cain firmly aligned themselves with the Washington-Wall Street axis that put-over the greatest crony capitalist raid ever perpetrated on the U.S. Treasury, and they also reminded Tea Party and conservative movement voters why they can not be trusted to change Washington's insider culture.