Dean Baker
That word would be "TARP" of course. The night before Christmas, the Treasury announced that these two bankrupt mortgage giants would get an unlimited draw on the taxpayers' dollars. This looks a lot like TARP.
Just to remind everyone, the original TARP program was about buying up bad assets from banks. It had the appearance of the mother of all bailouts, as it seemed likely that the government would overpay for these assets, handing public money to bankrupt banks. The TARP changed course, with the government providing hundreds of billions of dollars of loan money to banks at a time when the private sector had no confidence in the banking system.
The TARP, along with the much larger lending programs from the Federal Reserve Board and the FDIC, succeeded in preventing the financial system from collapsing. The banks are now back on their feet, with near record profits and near record bonuses for the executives who are so skilled in getting public money. The largest banks have now repaid their TARP money, with many smaller banks anxious to follow suit in order to avoid troubling questions about how they have used their taxpayer dollars.
Fannie Mae and Freddie Mac: Just a Four-Letter Word?
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