STRONG GOVERNMENT AT ITS BEST:

Treasury Secretary Timothy Geithner tackles five myths about TARP (Timothy F. Geithner, October 10, 2010, Washington Post)

[T]he program was essential to averting a second Great Depression, stabilizing a collapsing financial system, protecting the savings of Americans and restoring the flow of credit that is the oxygen of the economy. And it helped achieve all that at a lower cost than anyone expected.

As we put the TARP to rest, let's also put to rest some of the myths about the TARP.

1. The TARP cost taxpayers hundreds of billions of dollars.

The true cost of the financial crisis will always be measured by the devastating losses of jobs, homes, businesses, retirement savings and fiscal revenues. But the cost of the TARP, which succeeded in reducing the overall economic damage, will be considerably lower than once feared. In fact, the direct budget cost of the program and our full investment in the insurer AIG is likely to come in well under $50 billion -- $300 billion less than estimated by the Congressional Budget Office last year. And taxpayers are likely to receive an impressive return (totaling tens of billions) on the investments made under the TARP outside the housing market.

Even looking beyond the TARP to the losses associated with Fannie Mae and Freddie Mac's pre-crisis mistakes, the direct costs of the government's overall rescue strategy are likely to be less than 1 percent of GDP. By comparison, the much less severe savings and loan crisis of the late 1980s and early 1990s cost 2 1/2 times that as a share of our economy. [...]

5. The TARP was the centerpiece of a strategy by President Obama to assert more government control over the economy.

The TARP was created by a conservative Republican president, who was also forced by the crisis to take over Fannie Mae and Freddie Mac, lend billions to the automobile industry and guarantee money-market funds. And the TARP was championed by the same Republican congressional leaders who are in office today. They deserve more credit for the courage they showed than they seem willing to accept now.