Everybody Hates TARP - but Should They?

The much-maligned bank bailout program known as the Troubled Asset Relief Program, or TARP, officially expired Sunday. That means the Treasury Department can't commit unspent money from the $700 billion program to new initiatives or use repayments for TARP programs.

TARP - which many forget was passed two years ago under President George W. Bush- is seen by many Tea Partiers as the original sin that caused outrage over federal government spending to finally boil over and prompt the formation of their movement. The program has been enormously unpopular: A majority of Americans (including three in four Tea Partiers) told CBS News earlier this year that it was unnecessary, and both Republicans and Democrats who voted for it have seen their vote used against them in their reelection bids.

For Republican incumbent Robert Bennett of Utah, who failed to even secure his party's nomination this year, a vote in favor of the bill was a major factor in the end of his political career; for Democrat Barney Frank, the chair of the Financial Services Committee and a 15-term incumbent, it has helped energize a Republican challenger with a small-but-not-impossible chance for an upset victory.

But lost among all the disdain for TARP is something of an inconvenient truth for critics of the program: It has turned out to be far cheaper than originally anticipated, and is seen by many to have been essential to keep the economic downturn from turning disastrous.

As the New York Times reported last week, the White House now expects the program to come in at a cost of $50 billion or less - and could even end up turning a profit for the government. (The nonpartisan Congressional Budget Office estimates the final bill at $66 billion.) Many of the institutions that received TARP funds, including banks and auto companies, have paid back the money with interest, and American International Group (AIG) last week announced plans to repay its outstanding bill.

And while critics still lament that the program set up expectations that the government will bail out Wall Street when things get tough - a precedent they warn could encourage future risk - both independent analysts like Brian Bethune of IHS/Global Insight and Republicans like Sen. Judd Gregg of New Hampshire say the program was necessary and effective.

"This is one of the few programs in the history of this country where the taxpayers made an investment, it did what it was supposed to do -- which was stabilize the financial industry -- and they got their money back with interest," Gregg told NPR.

Past of the PR problem for TARP - and for another unpopular-yet-effective program, the economic stimulus package - is that it is difficult for Americans to see the positive effects when the economy continues to struggle. TARP may have helped stave off a depression, but many Americans still find themselves without jobs, leaving them less-than-primed to celebrate the effectiveness of government programs.

And for many Americans, the fact that wealthy bankers got a bailout while they struggled economically is a bitter pill to swallow, no matter how effective or necessary the bailout may have been. Even Treasury Secretary Timothy Geithner acknowledged that the program "wasn't fair."

Neel Kashkari, who ran TARP for seven months, was vilified when he went before Congress to defend the program by politicians looking to channel popular anger. (One congressman, Democrat Elijah Cummings of Maryland, even referred to Kashkari as a "chump.") But behind closed doors, he told NPR, the same lawmakers who were vilifying him publicly were expressing their thanks.

"Oftentimes afterward, when the cameras were off, they would take you into a back room and tell you that they really appreciate how hard I was working or our team was working, that they support us and our programs, and let us know if they could be helpful," Kashkari said. "It was a 180-degree change from what they were showing in front of the camera."

The experience, he noted, left him both demoralized and inspired.

"On one hand, I am cynical of Washington and the politics and people more focused on maintaining their popularity or getting re-elected than doing the people's work," he said. "At the same time -- in the depth of the national crisis in September of 2008 -- I saw Washington at its finest. I saw and I was a part of Democrat and Republican leaders coming together to do something deeply unpopular but yet absolutely necessary for the sake of our country and for the sake of the American people."