Meet Herb Allison: Minister Of Bailout Propaganda
Oct 7, 2010 at 7:50 PM
Dr. Pitchfork in Bank of America, TARP, auto bailouts, bailout fiction, bank bailouts, banks, bernanke, financial crisis, gm, herb allison, tarp, treasury

By Dr. Pitchfork

The Truth About Bank Bailouts & Analysis Of TARP Alternatives

TARP Czar Herb Allison joined the idiots parade of TARP defenders Sunday with his Huffpo piece called "The Untold Story of TARP."  Of course, you know that story already.  You must have heard it a dozen times this week, alone.  It's the same story Steve Rattner told in the Financial Times and it's the same story Tim Geithner told to Dan Gross just yesterday:  TARP saved the world and the people who hate it don't know what they're talking about. The problem with this story is not that it's gone "untold," but that nobody believes it!

Let's cut to the chase.  Time to play whack-a-mole.  (Bullet-point quotes taken from Allison's article.)

My Comment:  Of course we had other choices.  Loads of them.  I spent hours documenting several of them just yesterday.  (And see below.)  WHACK!

My Comment:  No, they were not.  Not even close.  This is just blatantly false.  Citi?  B of A?  Didn't happen.  WHACK!

My Comment:  Post hoc, ergo propter hoc.  Not even close, Herb.  TARP, along with Bernanke and Paulson's gloom, doom and martial law threats destabilized the economy.  We've documented well the government actions that helped stabilize the economy.  And TARP isn't one of them.  WHACK!

My Comment:  Um, no.  We're not "on the path to recovery."  The low, low interest rates on corporate and government debt reflect quantitative easing by the Fed and the extreme weakness in the economy, not the ability to finance a hot, speedy recovery.  This has been addressed here, here and here.  Herb has it exactly backwards.  WHACK!

My Comment:  Someone please tell me when Obama's favorite economist, Mark Zandi, and former Fed vice-chairman, Alan Blinder, suddenly became "independent experts."  (They are neither.)  The little propaganda piece they put out making these claims has been savaged by economist and blogger alike.  Negative points for citing it.  WHACK!

My Comment:  We've addressed this before.  This is nothing but a red herring.  The costs of the bailouts extend way beyond TARP's nominal price tag.  And the fact that we were paid back with our own money in many cases doesn't make us feel any better.  Besides, we have rigged our entire fiscal and monetary order, through both "stimulus" and ZIRP, to save bank executive jobs and bonuses.  If it cost "only" $50B to save Jamie Dimon and Lloyd Blankfein, it was $50B too much.  Herb is deliberately missing the point, here.  WHACK!

My Comment:  The TARP infusions at small banks were an afterthought meant to provide political cover for politicians and the big banks.  Besides, TARP in many cases had a negative effect on lending because of the dividend and other restrictions.  Because of that, several small banks wanted out of TARP as soon as they realized they were being used, and many of them paid a steep price in getting out of the deal.  Nice try with this one, Herb.  WHACK!

My Comment:  "Many people"?  Try the entire corporate bond market.  Never mind the fact that we are STILL "on the hook" for the "reckless acts of a few financial firms."  The Frankendodd had ZERO effect on the rates banks pay in the corporate bond market.  In other words, investors see no more risk of losing their capital in the wake of "Financial Reform" than they did before.  Bank bondholders know they will be bailed out.  It happened before and it will happen again.  You know it.  I know it.  And I suspect Herb knows it.  WHACK!


The bottom line on TARP is that almost no one has been held accountable.  And almost everyone, even those most responsible, have kept their jobs, been promoted, been awarded huge bonuses, or have ridden off into the sunset with millions in ill-gotten gains.  Our entire monetary and fiscal order has been re-arranged to serve the interests of a few at the very top of the pyramid.  The middle class has borne most of the risk.  And much of that risk is still with us, whether in terms of our currency, the national debt, or social and political unrest.  All the talk about getting the TARP paid back is a red herring. If someone breaks into your house, tears the place up, and then sticks a gun to your head demanding $700B, you don't thank him when he pays you back.  Because a) you had a gun stuck in your face, and b) your house is still a freakin' mess.

The message of the bailouts is clear.  The guys at the top get served first, at our expense.  And the buck stops nowhere.


Below are some of the alternatives to TARP:

It was this set of programs, and not the idiocy of TARP, that calmed the waters and kept the credit markets functioning through the crisis period.




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