WaPo: On the 2008 bailout, Biden is right and Sanders is wrong [View all]

[SunSeeker]

SEN. BERNIE SANDERS (I-Vt.) has decided to keep running for the Democratic presidential nomination, at least through Sunday’s one-on-one debate with former vice president Joe Biden. That means we can probably expect to hear more from Mr. Sanders about how wrong it was of Mr. Biden to vote, as a senator, for the 2008 bill establishing the $700 billion Troubled Asset Relief Program (TARP) — a.k.a., the Wall Street bailout. “Joe bailed out the crooks on Wall Street that nearly destroyed our economy 12 years ago,” Sanders said in a recent Fox News town hall. “These guys, after destroying the economy, they came to Congress .?.?. and said ‘bail us out.’ ” The democratic socialist launched similar attacks on his 2016 rival for the nomination, Hillary Clinton.

As they say in Brooklyn — enough, already. The truth is that support for TARP should be considered a basic demonstration of political maturity and pragmatism, not some sort of betrayal of the working class. The TARP vote reflects well on Mr. Biden, and poorly on Mr. Sanders, who joined with 24 other senators from the left wing of the Democratic Party and the far right of the Republican Party in opposition.

Some relevant historical context: The outgoing Bush administration and the Democrats who controlled both houses of Congress had few good options for dealing with a once-in-a-century global financial collapse. As experts from the Federal Reserve and Treasury Department told the politicians, however, one sure way to turn the worst recession since the Great Depression into, well, another Great Depression, would have been to let the banking sector collapse and take millions of American households down with it. No doubt Wall Street irresponsibility played a big part in creating the crisis, as Mr. Sanders says, but the appropriate way to deal with that was to fix regulations — not to make a punitive point at the expense of Main Street.

The Obama administration inherited TARP and wisely administered it so that both banking and the auto industry were able to come back. Both of these economic pillars are much better positioned financially to withstand a major shock than they were in 2008, which is why, amid much discussion about the possible need to rescue various industries from the impact of the coronavirus, no one has yet mentioned Wall Street or Detroit. TARPended up using $426.4 billion of its available $700 billion to take equity in banks, a major insurer and two of the Big Three automakers, as well as to extend various loans. By the end of 2014, it had recovered $441.7 billion — a small profit which, even if not adjusted for inflation or uncompensated credit risks, still looks like a pretty good deal for taxpayers, compared to the costs of doing nothing.
https://www.washingtonpost.com/opinions/on-the-2008-bailout-biden-is-right-and-sanders-is-wrong/2020/03/12/4e47ae20-63b5-11ea-845d-e35b0234b136_story.html