Treasury Secretary Timothy Geithner is aiming to put to rest what he calls five “myths” about the controversial Troubled Asset Relief Program, which expired last week and was born at the peak of the financial crisis in 2008.
Geithner — in an op-ed published Sunday by the Washington Post — argues TARP “was doomed to be unpopular from inception, because Americans were rightfully angry that the same firms that helped create the economic crisis got taxpayer support to keep their doors open.”

But, he added, the program “was essential to averting a second Great Depression, stabilizing a collapsing financial system, protecting the savings of Americans and restoring the flow of credit that is the oxygen of the economy. And it helped achieve all that at a lower cost than anyone expected.”
He said the argument that TARP cost taxpayers hundreds of billions of dollars is a myth. The true cost of TARP, he said, “will be considerably lower than once feared.” The direct budget cost of the program and the full investment in the insurer AIG is likely to be “well under $50 billion — $300 billion less than estimated by the Congressional Budget Office last year.”
He said taxpayers are also “likely to receive an impressive return (totaling tens of billions)" on the investment outside the housing market.
He said a second myth was that TARP was merely a gift for Wall Street that did nothing for common folk.

“To protect Main Street from the damage caused by a financial crisis, you must first put out the financial fire,” Geithner wrote. “That is precisely what the government did.”
TARP did not leave the financial system weak, he wrote. “The U.S. financial system has been completely overhauled and is in a much stronger position today than before the crisis,” he wrote. “In fact, the weakest parts of the system are gone.”
The U.S. banking system, he wrote, is still less concentrated than those in other major countries and is a comparatively smaller share of the economy.
“We have 7,800 banks, not two or five, and we are less dependent on banks overall for credit, with securities markets and other financial institutions providing roughly half of all credit to businesses and individuals,” he wrote.
Finally, Geithner asserted TARP was not a centerpiece of any strategy by President Obama to assert more government control over the economy, noting it was created by former President George W. Bush, who committed nearly $300 billion for the program when he was forced to take over lenders Fannie Mae and Freddie Mac and lend billions to the auto industry and guarantee money-market funds. It was also “championed by the same Republican congressional leaders who are in office today,” he wrote. “They deserve more credit for the courage they showed than they seem willing to accept now."
Obama, Geithner argued, “adopted a strategy designed to get the government out of the private sector as quickly as possible” and that the U.S. government has recovered more than $200 billion in TARP funds and made $28 billion in profits.
“And, in the end, 90 percent of that once-feared $700 billion TARP price tag either will not have been spent or will be returned to the taxpayers,” he wrote.