A reader writes:
I'm a long-time reader, proud contributor of a View from Your Window selection, and reporter at Bloomberg News. Your dissent of the day reader today is wrong.
The reader mentions the opposition from the Fed and the Clearing House to releasing details of the Fed emergency lending programs such as the Primary Dealer Credit Facility, among others. We at Bloomberg News sued the Fed and took the case to the Supreme Court. When the Obama administration decided not to pursue the case, Bloomberg won the data, in effect (the provision in Dodd-Frank by Sanders was done at the request of Mark Pittman, a fantastic reporter at Bloomberg who spearheaded this effort but unfortunately died a few years ago before he could see the work to its completion). I was one of the reporters to dig into the thousands of pages released.
There were some very risky moves by the Fed at the height of the 2008 crisis, no doubt about it. I wrote about the government accepting defaulted debt as collateral in return for cash, for example. Scary times, but as you have noted, they were necessary measure to prevent a recession from becoming a depression.
The idea that because TARP is a small part of the bailout, and you therefore can't say taxpayers didn't lose money on the emergency help from the Fed, is wrong. Fed Chairman Ben Bernanke testified to the Senate Banking Committee on July 21, 2010, saying: "Importantly, our broad-based programs achieved their intended purposes with no loss to taxpayers. All of the loans extended through the multiborrower facilities that have come due have been repaid in full, with interest."
I don't know the point of your reader's dissent. To merely say that the government action was much larger than TARP is true but offers no insight. You are right to say the financial loans made to Wall Street were repaid with interest (and that the automaker loans are the only ones to have not be fully repaid yet).
Update from the original dissenter:
I do not claim to have greater financial expertise than a reporter for Bloomberg News, but I have to object to his characterization of my argument. Let's be clear. I wrote a dissent. I was responding to your assertion that we had been "paid back" by the banks, with interest. My position was (is) that to make that kind of statement buys into an incomplete and, in my opinion, mythologized version of "The Bailout."
I might have oversimplified things by making it appear as if the $16 trillion number was entirely comprised of loans to banks, while that was not my intent. But to focus on accounting misses my fundamental point: The Bailout is many, many times larger than the $700 billion figure which is so often quoted. The government's stake in the recovery caused by the crisis is in the trillions, is still ongoing, and could grow ever larger.
While blame for this situation can be cast upon W's administration, Fannie and Freddie, overzealous mortgagors, and even on the lowered lending standards Clinton introduced, there is one group who unquestionably precipitated the crisis who has not been held accountable: Wall Street. The Street screams at any attempt to saddle it with blame or address its excesses, but look at what it wrought! To say they have "repaid" their debts when there will be a tab in the trillions, across multiple industries, for an indefinite time into the future, is to mischaracterize The Bailout and Wall Street's accountability. It's enough to make you frustrated and angry.
And that's what my dissent concerned: your response to a sign held by a protester, a protestor at an event expressing a sense of frustration and anger with the consequences felt throughout an entire society – entire world – of actions by an unaccountable industry. Our entire world is different. Theirs has stayed exactly the same. We cannot point to TARP and interest payments and say, "Ah, thank you, we are repaid." That was my argument. What I said was true. I like to think it had at least a shred of insight.
The Dish 