SOURCE: USA Today

Opposing view: TARP was a flop

Target relief to Main Street families and businesses, not big banks.

By Paul Hodes

A year ago, as our nation stood on the brink of economic collapse, Congress decided that to stabilize our financial system, we should spend $700 billion to bail out Wall Street banks. I opposed this move. Some now claim that since our banking system averted collapse, the Troubled Asset Relief Program — TARP — must have been the right approach. Unfortunately, the results show the opposite.

When America spends taxpayer money, we need to make sure it is being spent right. But after sending hundreds of billions of taxpayer dollars to Wall Street with little accountability or oversight, we still haven't seen an increase in lending, we still face a massive foreclosure crisis and no one can say exactly where all the money went.

The $700 billion was originally supposed to buy "troubled assets" from banks. But the government did not buy those assets, and with many of those assets still on banks' balance sheets, Congress' oversight panel recently concluded that "the financial system will remain vulnerable to the crisis conditions that TARP was meant to fix."

So, where did all of that taxpayer money go instead? More than $180 billion of it was used to bail out the insurance company AIG. AIG promptly paid massive executive bonuses and paid off other Wall Street banks, leading to huge profit reports for some of our largest financial institutions.

Many of the remaining TARP dollars have gone directly to help banks' bottom lines, but those banks cannot tell us exactly what they did with the money. Over the past year, millions of Americans have lost their jobs, their homes and their savings because of the mess that Wall Street gave us.

Many of us who opposed TARP agreed that we needed to act — but we needed the right solution. Instead of TARP, we could have created a more effective program that focused our help on Main Street families and small businesses instead of just banks and financial institutions.

Today, our economy is still recovering. Many Americans are still struggling. A year after TARP, many Americans like me are left to wonder whether the bailout of Wall Street really helped their families' bottom line.

Rep. Paul Hodes, D-N.H., is a member of the House Financial Services Committee.

Posted at 12:21 AM/ET, September 23, 2009 in USA TODAY editorial| Permalink ----------------------------

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