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.
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.