Bailouts have worked

Opinion: November 17, 2010 at 12:00a.m.

Philadelphia Inquirer: Former President George W. Bush chuckled when an interviewer told him that half of Americans believe President Obama created the bank bailouts.

“Fifty percent of the people were wrong, ’cause it happened on my watch,” Bush said.

Exit polls from the midterm election showed that a significant number of voters wanted to punish Obama and Democratic candidates for the bailouts. That sentiment overlooks the timing of the government’s emergency action — Bush initiated the $700 billion Troubled Asset Relief Program for Wall Street in September 2008.

Voters’ anger also ignores that Bush was right to take such unpopular steps as TARP and the auto bailouts.

Another fellow who supported the bank bailout was the new presumptive House speaker, Rep. John A. Boehner, R-Ohio.

An unlikely success

Bailing out Wall Street caused deep public resentment, in part because it was viewed as rewarding reckless behavior. But in the two years since, nearly all banks have paid back the money and the U.S. Treasury has earned at least $25 billion on the program. As Bloomberg reported, that’s enough to cover all farm subsidies nationwide for two years.

Two respected economists, Mark Zandi and Alan Blinder, estimated in a study that without the bailouts and the much-derided economic stimulus act of 2009, unemployment could have risen as high as 25 percent.

In a new book, Bush reveals that he decided to bail out General Motors and Chrysler even before they asked for help.

Ford, the only one of the “big three” automakers not to accept a federal handout, would have been imperiled if the other two firms had failed. Bush’s economic advisers warned him that the immediate bankruptcies of all three could have cost another one million jobs, on top of a recession that ultimately cost more than eight million jobs.