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Frum: Banks are OK, but who cares?

Commentator David Frum.

TEXT OF COMMENTARY

[CORRECTION 9/16/10: David Frum's commentary about voters blaming President Obama and other politicians for a bank bailout that he believes saved the financial system omitted when the TARP lending program to banks began. It began before President Obama took office and has continued under his administration.]

Kai Ryssdal: With the primaries last night, we are now basically set for the fall elections. We know who's going to be running against whom. And we know what we're in for: Weeks of campaign ads about the direction of the country, how to bring back jobs and what to do to fix the economy.

Commentator David Frum has some observations about that intersection of politics and the economy.


David Frum: In the first days of the Obama Administration, early in 2009, an important decision had to be made. America's banks had racked up $1.5 trillion in losses during the financial crises -- more than their combined total capital. The banks were bankrupt.

Some economists argued that the best choice was to follow the example of Sweden in the 1990s: The government should nationalize all the banks, sift through the wreckage, transfer bad assets to a single government-owned "bad bank," and then return the cleaned-up banks to private ownership.

This option was shot down by Treasury Secretary Tim Geithner and economic adviser Larry Summers. They advocated government help to recapitalize the banks without taking them into government ownership. And that is what happened.

The private banking sector has now recovered its profitability. It is rebuilding its reserves, and the banks have repaid most of the TARP loans they received from the government.

Everybody happy? Far from it. The TARP bailout may have averted a global depression, but it violated just about every idea of fair play. Voters don't care that things might have been worse; you get no marks in politics for beating the spread. Dissatisfied voters seem almost certain to administer severe punishment to the administration in November.

Bailouts have become poison for Republicans too. In Utah, Republican Senator Bob Bennett lost his party's nomination in large part because of his vote for the TARP bailout.

You can save the world -- but still lose your job.

Politicians will learn different lessons from this story. Some will learn: Don't stick your neck out for anybody. But there's another possible lesson too: We're all headed to retirement sooner or later, whether we like it or not. It's not a bad thing to be able to tell your fellow retirees that you did something big and important during your time on the job.

Ryssdal: David Frum spent time writing speeches for President George W. Bush. He's now the editor of Frum Forum. Next week in the rotation, Robert Reich is back.

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Well, the comments below are correct when focusing on Frum's apparent ignorance of the TARP origin. But that does not make all of his other comments wrong: he is correct when he notes that TARP violated many voters idea of "fair play". Another point: while most of the TARP dollars have been repaid, there are still many community banks with this albatross hanging over their heads. Serious indeed.

BTW, to Rufus McBufus, we don't care what you "sincerely believe" about the future. Such is not fact. Please stick to facts, not your predictions.

I can't stop laughing at the revisionsism enough. Frum is indeed incredibly wrong about the administration responsible for TARP. What amazes me, however, is the declaration of its "success" and the desire to claim ownership. This whole affair is far from over. I sincerely believe that in the fullness of time it will be well understood that TARP doomed us all and made the world even more dependent on now even "Too Bigger To Fail" banks. Sweden had this right and the bailout mentality is all wrong. Passing TARP was hardly heroic or sticking your neck out. True heroes would have lined up the banks and shot them between the eyes in bankruptcy. This is what was richly deserved. Unfortunately our captured political class is all cowards.
-rufus

How could you allow David Frum to suggest that TARP began with Obama? How does that help anyone? It hurts Frum's reputation, it makes Marketplace look clownish and it misinforms listeners. So how could you do it? And what are you going to do to correct it? Jay Rosen www.pressthink.org

David, where are you Frum?
It's not the first time you've done this type of thing -- and you're so Young!
Is Marketplace your tryout for Fox ?

David Frum puts the blame for TARP on the Obama administration. Didn't the bailouts begin under Bush? Frum's misrepresentation deserves a correction or are NPR commentators immune to fact-checking?

Quick fact check for you guys:

Who signed TARP into law? Easy, George W. Bush

Where did the bill come from before it reached President Bush's desk? Easy again, The House of Representatives and the Senate.

Who voted for TARP in the Senate? 74 Senators, including future President Obama and Senator McCain.
Source: http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm...

Did both of these Senators, whilst running for the Presidential election, attend a financial summit with President Bush to discuss TARP? Yup.
Source: http://www.npr.org/templates/story/story.php?storyId=95054403

Is Mr. Frum correct in implying that President Obama is the root cause of TARP? No, but President Obama did vote for it in the Senate and has a part in it being the American mindset today.

Carry on.

This sounds like a sound byte from Glenn Beck. Mr. Frum does his own party a disservice by failing to acknowledge that the plan originated and was passed by the Bush administration. And initially, most of the money was spent in the Bush administration. Now we know that it didn't cost nearly as much as everyone thought it would because so much of it has been paid back. To me, the facts are not evident in this story.

David From did not "imply" that TARP was enacted by the Obama administration, he lied. Although bald-faced lies are the provence of Republican operatives since Karl Rove, allowing a political hack a podium as a commentator to lie on Marketplace threatens your credibility.

Vetting is for real journalist.
If you've read previous Frum articles on Marketplace y'all would know this.

btw: How are you stimulating the economy David? How many jobs have you created criticizing the White House?

I also demand a retraction of Frum's claim that TARP was the Obama administration's creation. Perhaps short memories are an asset for Republican speech writers but I do not countenance historical revisionism. I expect better from Marketplace.

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