Abusing TARP
10th December 2009
Amid talk that the Obama administration plans to use money from the Troubled Asset Relief Program (TARP) to fund a new stimulus package, it is important to understand what TARP actually accomplished, who benefited, and who paid the price. A major component of the administration’s new stimulus plan would eliminate fees and increase guarantees on loans offered through the Small Business Administration (SBA). Small businesses are the source of most job creation in the U.S., but they are having a hard time finding financing in the current environment. Obama’s speech at Brookings Tuesday stressed the need for government action to get credit flowing again to this sector, but it did not attempt to explain why such credit is currently hard to come by. That might be because any honest attempt to do so would lead back to the government’s flawed strategy for saving the banks.