The government's $700 billion rescue of the financial system in 2008 was as popular as "bailing out rattlesnakes," Vice President Joe Biden said Friday in Seattle. "In fact," he quipped, "I like some of the snakes better."
When all is said and done, the program could go down in history as one of the most unpopular government initiatives ever. The Obama administration, which continued what the Bush administration started, is well aware of the program's pitfalls in the eyes of the public. Just last month President Obama dubbed the program "deeply offensive", but he still defended it as "a necessary thing."
On Wall Street today the big banks and financial markets are booming once again. On Main Street, though, where 8.4 million jobs have been lost since the recession started in December of 2007, help has been slower to arrive. Many Americans still believe the bailout only helped save the people who caused the crisis in the first place, not the innocent folks who played no role in the meltdown but have suffered greatly because of it.
But a flurry of positive news about the program in recent weeks could help reduce bailout outrage – and that, with mid-term elections approaching in November, could have far-reaching ramifications.
Earlier this week a watchdog group – the same one that last year blasted the Obama administration for not getting the highest price possible for stock warrants sold back to banks exiting the program – said the government was now raking in higher returns.
The Congressional Oversight Panel found that the Treasury Department had received 92 percent of full market value on the warrant sales, with total receipts from these sales expected to total $9.3 billion.
Taxpayers May Get All Their Money Back from Bailout
Moreover, the administration has proposed a fee on banks that – if enacted by Congress – would result in taxpayers not losing a single penny from the program. Under the proposal, about 50 of the nation's biggest banks with assets of $50 billion or more would pay a tax, a move that could recoup $90 billion back into government coffers.
"We want our money back and we're going to get it," said President Obama when he announced the proposed bank fee in January.
In a statement this week on the one-year anniversary of the administration's "Financial Stability Plan", Treasury Secretary Tim Geithner said that if Congress approves the measure, "Americans will not have to pay one cent" for the Troubled Asset Relief Program.
Compare that to the administration's budget from last February – when the projected cost to the deficit of the government's financial rescue efforts was over $550 billion – and it is clear that the situation today is brighter than it was just one year ago. Now the government projects the impact of these rescue efforts to be under $120 billion.
The Treasury has already recouped two-thirds of the bailout's investments in banks. Those investments, the agency says, have helped make $17 billion in income.
Some of the nation's biggest banks, such as Bank of America and Wells Fargo, have now received government approval to pay back their bailout money. Others, such as Goldman Sachs and JPMorgan Chase, had already been granted approval months ago.
"We are committed to repaying every penny of TARP and believe that TARP will continue to generate a profit for the taxpayer," Scott Talbott, chief lobbyist for the Financial Services Roundtable, told ABC News.
The federal officials responsible for the bailout's enactment have also enjoyed a positive few weeks. Federal Reserve chairman Ben Bernanke won Senate reconfirmation for a second term after overcoming some initial doubts among lawmakers on Capitol Hill.
Meanwhile, Geithner's predecessor at Treasury, Henry Paulson, used the release of his new book on the bailout, "On the Brink," to tout the successes of the government's rescue efforts.
"In terms of the actions we took, I have no doubt they helped us avoid disaster," Paulson said in a February 1 interview with "Good Morning America".
But despite such claims, many critics – from Washington watchdogs to Capitol Hill lawmakers to Main Street citizens – are still angry about the bailout.
"Many of TARP's stated goals…have simply not been met," said Neil Barofsky, the Special Inspector General for the TARP, in a Jan. 31 report to Congress.
Barofsky said consumers and businesses are still struggling to get loans, small businesses are still waiting for an aid program to start, homeowners are still grappling with record levels of foreclosures, and job seekers still face an unemployment rate close to 10 percent. To make matters worse, Barofsky warned, financial regulatory reform measures have failed to make headway on Capitol Hill. While a reform bill passed the House of Representatives late last year, the Senate measure has yet to even emerge from the Banking Committee.
"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky said.
Most Americans, meanwhile, still point the finger of blame for the meltdown squarely at the same banks that benefited from the bailout. In a Jan. 20 ABC News/Washington Post poll, 79 percent of Americans blamed the economic meltdown on "banks and other financial institutions for taking unnecessary risks." Nearly six in 10 said the banks shoulder a "great deal" of the blame.
"We are working hard to restore consumers' trust in the industry," said Talbott.
Whether the financial sector will manage that remains unclear. What is clear is that nearly a year and a half after the bailout's enactment in the fall of 2008, the controversy swirling around the program shows no sign of letting up. But if nothing else, recent developments may help boost the public's approval of the controversial program – or at least quiet the criticism.