Anyone who laments the lack of bipartisanship in contemporary America can sigh with wistful nostalgia over a new Vice documentary (in collaboration with HBO) on the trillion-dollar 2008 government bailout fondly known as TARP.
As director John Maggio points out in A Vice Special Report: Panic: The Untold Story of the 2008 Financial Crisis, airing Monday at 10 p.m. ET on HBO, no one on either side of the political aisle liked the idea of the government bailing out large failed or failing financial and corporate institutions.
The left saw it as giveaways to Wall Street and the rich at a time when their failures had crippled millions of ordinary citizens.
The right saw it as a betrayal of capitalism and the free market.
Both sides saw it as rewarding the behavior, and as it all unfolded in the middle of a presidential election between Democrat Barack Obama and Republican John McCain, it must have seemed like a natural for both candidates to run against it.
They didn’t because the only consensus stronger than the opposition to the bailout was the reluctant agreement that if it weren’t enacted, many of those large banks and financial institutions might go under. If that happened, millions more ordinary people would find their money and their jobs gone, and the country would face the real possibility of another Great Depression.
So the plan, hatched in its first form under President George W. Bush, was fully implemented by Obama after he won the November 2008 election.
Panic takes extensive note of the opposition to the bailout. It argues persuasively that anger over the bailout fueled the formation of the Tea Party and much of the populist fervor that picked up the same angry banner.
It tacitly nods approval to those who say the bailout set in motion the forces that propelled Donald Trump into the White House.
And, in the end, it suggests the bailout was essential to preserve the economic health of the United States, and, by extension, much of the world.
It makes that case largely through the three men who formulated the original plan – Treasury Secretary Hank Paulsen, Federal Reserve Chairman Ben Bernanke, and New York Federal Reserve chief Timothy Geithner. They recount, step-by-step, how they came up with the plan and why, then the long, arduous uphill battle of forcing a reluctant Congress and country swallow it.
All three stress they thought it was a bad move. It was just better than any other move and much better than no move at all. The collapse of banks and mortgage institutions, for instance, could have thrown millions of people out of their homes – on top of the hundreds of thousands to whom that had already happened.
Propping up the institutions, they argue, was the only way to keep those commitments intact and maintain confidence in an economy that was teetering on the brink of implosion.
George W. Bush, who like Obama and others is interviewed here, says he hated the idea and still does. But, he says, he too was persuaded there was no way around it. So he helped twist Republican arms, and ultimately enough joined with a majority of Democrats to push the TARP bailout through.
Geithner acknowledges, like his colleagues, that the bailout never won public approval. Ironically, he and Paulsen both note, it turned out to be a financial win for taxpayers, who ultimately made billions more than they spent as the bailed-out institutions recovered.
Panic provides a fascinating if at times familiar retrospective on the political process here. It examines how legislators of very different ideological persuasions were convinced to support something they didn’t believe in that could also have hurt them politically.
As for the three initial architects of the plan, they stand by their actions today even as they acknowledge not everyone sees those actions as profiles in courage.