End TARP Program Now

This from an article at Heritage Foundation that lays out why this nonsense of bailing out every body is just crazy -

Why TARP Should Be Ended
Stuart M. Butler, Ph.D., is Vice President for Domestic and Economic Policy Studies at The Heritage Foundation.

The original TARP program could be justified as appropriate action by government to avoid a catastrophic failure of financial markets.[1] As a cardinal principle, the federal government should not intervene to save firms from the consequences of bad business decisions, which is why the proposed congressional Detroit bailout was so unwise.
But in rare cases a second principle comes into play: When the basic functioning of a market is breaking down, with potentially disastrous consequences for the entire economy, there can be a case for government to act to help restore a functioning market.[2] The accelerating turmoil in the financial markets in the early fall, with the prospect of the entire credit system seizing up and a spiraling economic collapse, provided an urgent case of the need to apply the second principle.

At that time, it appeared that the critical step was for the Treasury to purchase "toxic assets" (consisting of mortgage-backed securities of uncertain value) so that credit markets could function smoothly again. TARP was created to address this necessity. While Congress explicitly limited Treasury action to assisting financial institutions to remain functional, the legislative language apparently gave the Treasury too many ways of using funds for additional purposes.


The problem now is that the Treasury has concluded that the purchase of toxic assets is no longer practical and has embarked on a troubling pattern of potentially harmful ad hoc policymaking and mission creep. A major example of this was Treasury Secretary Henry Paulson's announcement on November 12 to suspend the original purpose of TARP and to use flexibility granted under the law to explore a wide range of alternative uses of the funds, from guaranteeing securities backed by student loans and credit card debt to using TARP to refinance problem mortgages. This step confused markets, reintroduced uncertainty into the pricing of mortgage-backed securities, and triggered a lobbying frenzy for ever-more "flexible" uses of the TARP funds.[3]

The Bush Administration's decision to consider responding with TARP funds to Congress's refusal to bail out the Detroit automobile companies underscores how far the Treasury has reinterpreted the mission of TARP. The only way to prevent further misuse of the program is to end it.