Do you remember waaaaaaaaaaaaaaay back in 2008 all the banks were about to die? They needed something under $1 trillion in loans and investment to get back on their feet. Surprisingly, the government gave the banks and other financial institutions the money they needed to survive. As 2009 comes to a close, let’s look back on some of the people and companies that were made famous by TARP.
- Secretary Hank Paulson: Mr. Paulson stepped down as Secretary of the Treasury as the new administration took over at the beginning of the year, but Hank’s “bazooka” of capital injection into the finance sector seems to have worked. So being the face behind the (relative) success of TARP would be sufficient for retirement. This is basically what he’s done. He’s been named a distinguished teaching fellow at the Nitze School of Advanced International Studies at Johns Hopkins University. This is largely considered the most advanced graduate school for diplomacy, policy, and economics. Hank should fit right in nicely. And since this campus is located in Washington, he’s not far away in case the Treasury needs some “consulting” work.
- Secretary Timothy Geithner: Geithner replaced Hank at the Treasury which makes his role appear to be one of inherited stress. But most forget that before he took the helm in DC he was the governor of the NY Fed. This role may have been more important than the Chairman of the Fed, Bernanke. Lately, Geithner has come under scrutiny for inaction and some poor decisions. It’s possible he won’t be around for the entire presidency, which is fairly common in these cabinet positions.
- Ben Bernanke: Our beloved Federal Reserve Chairman has been here every step of the way, cleaning up the mess left by his predecessor, us, other government agencies, and some of his own too. His term is up for renewal next year, he’s expected to get the position again. Personally, I think this is a good idea. He may not be perfect, but no one is in a better position to do a better job. Besides, we’re not out of the woods yet. Potential issues in 2010 and 2011 could create a double-dip recession. Bernanke knows how the Fed moves will impact the economy better than anyone else. His short term priorities may be keeping Congress from taking back some of the powers the Fed has.
- Neel Kashkari: Who you say? This guy is important. He worked at the Treasury under Paulson and then Geithner, he was the point man for all things TARP. He’s recently left his role for a position in the private sector with PIMCO, a very large bond investing company. Apparently, he’s relieved to get out of Washington. I don’t blame him. I made jokes about how the guy responsible for $700 billion has a name that looks like “cash-carry”, but it seems he did as good a job as possible considering the circumstances.
These 4 men, with the help of hundreds or perhaps even thousands of others, built, maintained, and are starting to disassemble TARP. All of them escaped alive. Now that the money is starting to get paid back, we would all hope that it would be used to settle some of the national debt that increased due to the program. Sadly this is not what will happen. Obama is talking about using the money as additional stimulus.
But what happened to the banks that got the TARP money? Tune in tomorrow to see how they’re doing.