The continuous noise from the left, the MSM and, of late, the Occupy Wall Street rabble and their enablers about “banks” being “bailed out” has now gone beyond normal bounds of exaggerated political rhetoric and verged into financial Luddism and demonization. In fact, the left and MSM have so successfully seized the dominant narrative that it is taken now as an immediately obvious fact that the “Wall Street banks” were “bailed out” by taxpayers.
But is it true? Were the banks really “bailed out”? The image suggested is that the U.S. government just “gave” money to large banks, no questions asked…and thereby rescued them, apparently by making them whole on losses incurred in a corrupt process.
But this picture of the TARP program in 2008-9 is completely false, especially compared to actual bailouts made to Democratic constituencies that DO conform to the “bank bailout” image: the auto industry quasi-nationalization and UAW payoff and the exercise of FNMA/FHLMC guarantees. The bank programs were nothing like the bailout of GM or Chrysler, which were actually given money both directly and indirectly, through special tax legislation creating a loophole worth about $45 billion in foregone taxes, most of which will never be recovered. And at the same time an irregular process robbed senior creditors–now THAT’s a bailout!
But in what sense were “the banks” bailed out? They weren’t in fact “given” any of our money. Indeed, most of the largest banks which were perfectly healthy were forced to take TARP funds so that there would be no stigma attached to the few large unhealthy banks…and the MANY unhealthy small community and regional banks.Tell a lie, make it big, and repeat it over and over and over. It's a safe assumption that it will work every time, at least in the short run, which is fine for politics. It's people like John and his fans who try to keep reality alive in the minds of the public.
If you have any interest in the topic at all, do yourself a favour and read the whole thing.