Don’t forget, the bailouts worked

etween the passage of the Troubled Asset Relief Program (TARP) and the massive quantitative easing of the Federal Reserve, markets realized that the government was backstopping the financial system, that credit was beginning to flow again, and that if no one else was going to inject capital into the system, the U.S. government would do so. Part substance, part symbolism, the effect was to restore confidence and stability to the system. In fact, the financial system bounced back so fast that the government will likely recover almost 90 percent of the funds it committed during those months, making this one of the cheapest financial bailouts in history.

The best evidence that TARP worked is that now, most people think it was unnecessary. In fact, about 60 percent of the country thinks it was a bad idea. Congressmen and senators who supported it now distance themselves; the most powerful line of attack against any of them tends to be that they voted for the bailouts. JFK said that victory has 100 fathers, and defeat is an orphan. But this is the strange case of a success that no one wants to claim.