IF ANYTHING, IT WORKED TOO WELL:

The writer was chief economist and economic adviser to Vice President Biden from January 2009 to May 2011. He is a senior fellow at the Center on Budget and Policy Priorities.

The Troubled Assets Relief Program (TARP) worked a lot better, and at a much lower cost, than is commonly recognized.

TARP and related interventions by the Federal Reserve helped reactivate credit markets long before they would have recovered on their own, helped to stabilize the housing market, helped save the U.S. auto industry and helped prevent recession from morphing into something worse. And they did so for far less than early estimates and prior rescues had suggested were possible. [...]

●Although the initial 2008 legislation set aside $700 billion for the program, by March 2011 the Congressional Budget Office estimated that TARP would disburse about $430 billion and get back all but about $19 billion.

A Treasury analysis published last week, using current market values, found that if the federal government were to cash out its remaining holdings, such as its stake in AIG, it would at least break even and probably turn a small profit. Market conditions could worsen, of course, but remember that official and media estimates of the cost of TARP ranged from the hundreds of billions to the trillions. The International Monetary Fund estimates that the average loss from 42 financial crises between 1970 and 2007 was 13 percent of GDP.

●Bank lending crashed along with the economy in late 2007. But banks began to ease lending standards as TARP was implemented, and accounting for the fact that underwriting is (thankfully) tighter than it was during the bubble, credit access is about back to pre-crisis levels.

●The housing market is, at best, bumping along the bottom. But here, too, the timing of home-price and sales stabilization coincided with TARP housing programs, including the rescue of Fannie Mae and Freddie Mac.

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