Is the Troubled Assets Relief Program Working? - Federal Investment Shows Big Returns

Dec. 9, 2009 - PRLog -- Hamilton, New Jersey - The White House recently announced that the $341 billion dollars in TARP money that was once going to bailout big banks has been cut by nearly $200 billion.

The Troubled Assets Relief Program has met heavy criticism from both citizens and Republicans as it has seemed to be less effective than projected, if at all, and does not allow weak, uncompetitive businesses to fail and be replaced. Though this news may be an attempt to bolster the administrations approval rating, it could be a significant sign that the banking system is recovering nationwide.

According to the treasury department, TARP funds invested in banks have produced better than expected returns making such a massive spending cut possible. Some in Washington remain skeptical, however, as the government officials have a history of fudging numbers, as they did with unemployment projections, or simply making them up entirely, as they did in the case of jobs saved or created by TARP money.

Banks, some of whom were forced to take bailout money, are now scrambling to pay back the Treasury in order to get out from the government restrictions that came with the TARP funds. The reason given for the original bailout of these large banks was they were so big and interconnected that they could not fail without dragging the economy down with them.

Many of these banks have simply stopped providing business loans, causing unemployment to rise to a record high for the decade; economic growth has stalled and the economy still does not show any strong signs of recovery.

The question posed to Washington now is where does the money go? The administration seems likely to push for funding to be moved over to job creation but republicans will surely oppose this move, supporting a deficit decrease instead. The president will give a speech on job creation this Tuesday and is guaranteed to begin a campaign for this extra TARP money to be moved to another industry.

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