While it’s far too early to give a final grade on the massive bailouts that have been approved by Congress, it is worth taking a look at what has happened thus far. I suppose an interim report card – even though there is little information available – is in order. The federal government has already shelled out hundreds of billions in an effort to restart our Nation’s failed financial system. Over a period of 16 weeks, our government had pledged, loaned or invested close to $10 trillion trying to fix ailing banks, jump-start financial markets and keep our domestic automakers from bankruptcy. But the final cost should not be that high since most of the assets the government is buying or insuring have some value. But, it’s very clear that we haven’t even come close to fixing the problems. In fact, the bailout may have made them worse in some instances, but the jury is still out on that front.
The best thing that can be said is that our financial system hasn’t totally collapsed and that is good. But equally clear is the fact that the system hasn’t been repaired. The bailout of the automobile manufacturers is too new to really assess and it’s obvious that more financial assistance will have to go in that direction based on early reports. The new Administration has been left with problems more massive than those faced by any previous Administration in my lifetime. The grades for the main two prongs of the bailout for the banks can be put at:
• The Troubled Asset Relief Program (TARP) should get a “D” at this juncture. Hopefully some good has come from the $350 billion doled out.
• The Homeowners aspect should be given an “F” since there has been no real direct help to homeowners that I can tell.
Hopefully, these grades will improve significantly once the Obama Administration and the new Congress have the opportunity the correct the weaknesses of the bailouts. Congress has given President Obama authority to use the remainder of the funds and it appears he has a good plan. I certainly have more confidence in the Obama Administration’s ability to get the job done.
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