Tim Massad, Assistant Secretary for Financial Stability with the U.S. Department of Treasury, was the featured speaker at the Clinton School of Public Service on Thursday (Sept. 26).
Massad oversees the Troubled Asset Relief Program (TARP), which provided financial support to the nation’s financial institutions and housing markets during the Great Recession in 2008. The controversial TARP plan was approved and began implementation in September 2008, and is nearing its 5-year anniversary this month.
Massad, whose presentation you can view at this link, offered a short Q&A with Talk Business Arkansas prior to his Clinton School speech.
TBA: Where are we with the TARP program?
Massad: We’re coming up on the five year anniversary of the TARP program. I think it’s very important for people to know this was a very successful program, as unpopular as it was – and it was unpopular for good reason. No one likes using government tax dollars to save private financial institutions. But we were on the edge of falling into another Great Depression in September 2008. We really were that close. This program was necessary to stabilize the system, to break the back of the panic. It worked and ultimately it’s going to cost practically nothing.
TBA: How do you get to that financial conclusion?
Massad: We have already recovered more money than we disbursed for all the TARP investments if we include all of Treasury’s profits on its AIG investment. So right now we’re in the black. We’ll continue to disburse a little bit more money for the housing assistance that we’ve provided to people, but we also have some additional investments that we’re working to collect. I think ultimately it will be close to zero costs if we add all those AIG profits.
TBA: There’s an element of the public that views this program negatively and will continue to view it negatively. Do the facts matter or will it always be a tarnished program?
Massad: Again, I think it’s just the inherent nature of it. No one wanted to have to do this. We’re still in an economy that’s not growing fast enough. We still have high unemployment. So particularly for people who are struggling, the fact that we may have saved the financial system and prevented a Great Depression, that doesn’t necessarily help them get a job. Nevertheless the reality is it could have been far, far, far worse and it’s because the government stepped up, acted very quickly, and with overwhelming force that we succeeded.
I think the other thing that people should note is that this is a day, a time when a lot of people are probably fed up with gridlock and Washington partisanship. This program is actually one of the few examples of bipartisan government that was a success. It was passed by bipartisan majorities in both Houses, signed by a Republican President, implemented initially by a Republican administration, and then implemented by a Democratic administration. It’s a success in a bipartisan way and that’s something we should keep in mind.