As children will one day study in History class, the Federal Government was very busy bailing out failing companies throughout 2008 and 2009. These bailouts notably included mortgage giants Fannie Mae and Freddie Mac, automobile manufacturers General Motors and Chrysler and financial institutions including Bank of America and the Goldman Sachs Group.
Since the passing of the Troubled Asset Relief Program (TARP) in 2008, pundits, politicians and citizens alike have questioned whether government bailouts were a good idea. In 2011 it has been determined by a Congressional Oversight Panel that while the bailouts were at least successful in preventing an even worse economic crisis, they might have negative ramifications in the long run.
The panel issued its final report in March of 2011 and concluded that TARP should be considered a success because of the resulting economic recovery and stabilization of Wall Street. However, the report also noted that homeowners and the rest of the general public (“Main Street” as opposed to “Wall Street”) have not benefited nearly as much from programs aimed at providing them with aid.
The report also cautions that some precedents set by TARP may lead to future crises, including the reinforcement of the idea that the government will bail out corporations who partake in reckless behavior and a lack of transparency that angered the public.
The panel concluded its report with the observation that the thorough scrutiny of TARP contributed greatly to its success, and that such scrutiny would also benefit future government programs.