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Troubled Assets Relief Program Essay

1185 words - 5 pages

Troubled Assets Relief Program: Right or Wrong
Michael J. Kneece
Midlands Technical College
Instructor: Kenneth Craib

Troubled Assets Relief Program: Right or Wrong
In 2008, when the “Great Recession” happened, Congress passed the Troubled Assets Relief Program (TARP). The Troubled Assets Relief Program allocated over $700 billion to aid in “emergency” loans to “critical financial and other US firms”, that were considered “too big to fail.” While the Troubled Assets Relief Program was created with great intentions, it failed miserably in the sense that it stole from taxpayers dollars. Some of the major recipients of TARP funds included JP Morgan Chase, Goldman Sachs, ...view middle of the document...

However there is a total of $150.6 billion that is uncommitted out of the total of about $700 billion. The numbers say in the uncommitted category that there were: in the Unused money $80.5 billion and however the honest ones Returned a little over $70.1 billion. Some of these numbers show that some of the banks use the money to grow to help their self, while others were actually in a need of the money and were able to pull their self-back out and pay the money back to the government. Troubled Assets Relief Program is a great and effective Program for the small businesses that were needing help to pull their self-back out to recover in those hard times. However as it seems to always do, the bad seems to overtake and rollover the good, the businesses that were “too big to fail” should have simply failed no matter what the consequences are.
With this Troubled Assets Relief Program firms received in the sense extra money that was used as a moral hazard. Our textbook talks about a moral hazard and describes it as “The tendency for financial investors in financial services firms to take on greater risk because they assume they are at least partially insured against losses.” (McConnell, 2012) How does this relate to the taxpayer, well the taxpayers which are you and me common folks that are having to pay the government all of this money for companies to be bailed out that we might not have anything to do with. That alone sickens me personally knowing that I’m having to pay for companies poor financial mistakes. It’s also nice to know that while these companies that are being bailed out, some of the big executives are still getting nice bonuses, I love to pay for that as well. If companies have to be bailed out, then they’re not doing something right, get out of the business!
“OneAmerica believes strongly that this is a step in the wrong direction. We believe this money will be used to help public insurers, shareholders, not their policyholders and will encourage excessive risk-taking in the future. We believe there are better uses of taxpayer money.” (OneAmerica Represenative, 2009) This is an article written by OneAmerica life insurance, retirement, and employee benefits company, they boldly said “We don’t need it. We are strong.” The taxpayer money has no place in the world in the life insurance business.
The government bailouts for banks did not do much to relieve the credit crunch for main street companies. Bloomberg Businessweek says that “In fact,...

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