Remember the Emergency Economic Stabilization Act of 2008 that created the Troubled Asset Relief Program, or TARP? The Emergency Economic Stabilization Act of 2008, called
the "bank bailout of 2008" by conservatives was proposed by Treasury Secretary Henry Paulson, passed by the soon-to-be lame duck 110th Congress, and signed into law by President George W. Bush.
Pushed strongly by President George W. Bush, Secretary Paulson and then-Minority Leader John Boehner TARP was opposed by a plucky band of conservatives led by then-Representatives Mike Pence of Indiana and Jeb Hensarling of Texas, but it ultimately passed the House 263-171.
Speaker of the House Kevin McCarthy and many other leaders in the current House of Representatives were around for that vote. McCarthy, who was part of Boehner’s leadership team at the time, was accused by conservatives of trying to have it both ways, but he ultimately voted NAY on final passage.
And so did Rep. Patrick McHenry (NC-10), who is now Chairman of the House Committee on Financial Services, and who will be a key player in any bailout proposal. However, Rep. Tom Cole of Oklahoma, now Chairman of the House Rules Committee, and another key player in any bailout bill, voted AYE on the 2008 bill.
Here’s a link to the 2008 House Roll Call if you want to check and see if your Representative was around then and how he or she voted.
Much of the debate at the time centered on government bailouts eliminating “moral hazard” from the market vs. the impact of a major bank failure on jobs and the broader economy.
Hindsight is always 20-20, but it is clear that almost none of the purported benefits of TARP and the subsequent Dodd-Frank banking “reform” bill materialized: Millions of jobs were lost in the financial services, real estate, homebuilding and construction and automotive sectors of the economy.
Regulatory costs went up dramatically causing a consolidation in the banking and financial services industry – the big got bigger and the small got eaten up – and here we are with another major bank failure and another demand for a bailout; and nothing but trillions more in debt to show for it.
And Democrats used the vast sums made available through TARP and other bailout programs to reward their friends and consolidate their position as the Party of Wall Street and the economic elite.
But there was some good news for conservatives.
In the aftermath of TARP, and in response to Rick Santelli’s rant about mortgage bailouts and a need for a new Boston Tea Party to oppose them, the Tea Party rebellion was created and powered by bottom-up leadership; individuals who cared passionately about freedom and constitutional government who saw or heard about Rick Santelli’s rant and spontaneously came together to make the Tea Party happen.
We will close our argument against a new bailout with a TARP results analysis from 2011 by National Review’s Jim Geraghty:
In autumn of 2008, we were told that if TARP did not pass, financial Armageddon would soon follow. I recall believing at the time that the stakes made the distasteful steps necessary.
Even then, however, there were indications that the whole enterprise was a cynical game: Then-House Speaker Nancy Pelosi was imploring House Republicans to get on board with the TARP proposal, while her lieutenant, Chris Van Hollen at the DCCC, was planning to use the vote in attack ads against Republicans in the 2008 House elections. In this light, Pence was trying to prevent his colleagues from acquiescing to a politically suicidal act spurred by bad-faith arguments...
...the populist outrage against TARP is not based on ignorance. The management and oversight of TARP since that vote represents a fundamental violation of trust with the American taxpayer, indicating TARP opponents had good reasons for their doubts. If you’re going to ask the federal government to give you gobs and gobs of taxpayer money to save your business because you claim the economy itself depends upon it, you had better treat that money as preciously as if it were water in the desert. The governing class and our financial titans said, “we need the money badly; we need you to trust us.” Americans did so, and then they saw that trust abused.
We witnessed hundreds of millions of dollars set aside for bonus payments at AIG. Much of the money ended up in the coffers of bailed-out firms foreign partners. The rules and scope kept changing: TARP wasn’t set up to help domestic automakers, but Bush and Obama decided to expand it. The Special Inspector General of TARP has charged 45 individuals with fraud and has 142 ongoing investigations, including 64 into executives at financial institutions that applied for ore received TARP funding, according to their most recent report to Congress. And at last count, 144 institutions had not made at least one scheduled dividend or interest payment.
To defend TARP, it takes more than, “the government gives taxpayer money to undeserving individuals and entities all the time. Life ain’t fair”…
That’s about one step away from turning a blind eye to criminal fleecing of taxpayers. To really work effectively, the entire TARP enterprise required recipients and lawmakers to behave with responsibility, transparency, honesty and competency. We didn’t get that, which strengthens the argument of those who opposed it.
In short, almost nothing that was promised about TARP panned out, except that we could argue that we have indeed avoided financial Armageddon. Instead, we enjoy this milder, semi-miserable Armageddon Lite with a jobless recovery and a moribund housing market.
Speaker McCarthy and the House Republican leadership team know TARP didn’t work as claimed. Many of them voted against the 2008 bailout, and they should stand united against a 2023 Silicon Valley Bank bailout. The Capitol Switchboard is (202) 224-3121 we urge CHQ readers and friends to call their Representative and Senators to tell them no bank bailouts.
George Rasley is editor of Richard Viguerie's ConservativeHQ.com and is a veteran of over 300 political campaigns, including ten presidential campaigns. A member of American MENSA, he served on the staff of Vice President Dan Quayle, as Director of Policy and Communication for now retired Congressman Adam Putnam (FL-12), as spokesman for now-retired Rep. Mac Thornberry (TX-13), formerly Chairman of the House Armed Services Committee and as Director of Communication for now-retired Rep. Jeb Hensarling (TX-5).
Troubled Asset Relief Program TARP
Emergency Economic Stabilization Act of 2008
Treasury Secretary Henry Paulson
Tea Party Movement
2023 Silicon Valley Bank bailout