In My Time - Dick Cheney [270]
Bills that involve raising revenue have to originate in the House. Since the House had just killed the TARP package, we needed a way to start over in the Senate, where we knew we would have more support. We were able to use a tax bill that had already passed the House as a vehicle to try again. Watching the stock market slide nearly eight hundred points had an impact on a number of members who had voted no the first time around. It made clear the very real costs of a loss of confidence in America’s financial sector and drove home the imperative to act. On Wednesday, October 1, the Senate passed legislation that would enable the purchase of troubled assets, and the House passed it on Friday, October 3, by a vote of 263–171. Not long after passage, Secretary Paulson, Chairman Bernanke, and New York Fed Chairman Geithner recommended using $250 billion of the TARP for direct infusions of capital into the banking system. I agreed with this approach. We were facing a situation where the value of the troubled assets could have been as much as $5 trillion, and we did not want to run the risk of having our $700 billion disappear with no impact. On the other hand, if we put $1 into a bank, they could leverage that amount by ten to multiply the impact of the money.
TARP has remained controversial and was indeed an issue that many successful candidates used against incumbents who had supported it in the 2008 elections. But as I write this in 2011, it is clear that TARP was a success. According to economist Robert Samuelson, of the $245 billion invested in banks, Treasury has already recovered approximately $244 billion. Treasury expects ultimately to record an overall profit from the bank investments portion of TARP of approximately $20 billion.
Within a few weeks of the passage of the $700 billion program, General Motors informed us that without significant government intervention, they wouldn’t survive. There was language in the TARP legislation that would allow us to use a portion of the funds for a loan package for the automobile companies, but I had reservations about doing so. Early in my congressional days, I had opposed the 1979 Chrysler loan guarantee, and I had continued throughout my career to be philosophically opposed to bailing out specific companies or industries. I believed our intervention in the financial sector was justified, because the federal government was responsible for maintaining the strength and viability of our economy, including our financial system and currency. Providing sufficient support to avoid the collapse of our banking system was something only the federal government could do. But, all things considered, companies in the private sector should be judged in the marketplace. Having the government intervene was not, in my opinion, a good idea.
The General Motors crisis came at the end of our administration and within a few weeks of our handover of power to the Obama-Biden team. The president decided that he did not want to pull the plug on General Motors as we were headed out the door. He wanted to give the incoming team time to decide on their policy options and therefore came up with a short-term package to keep GM afloat until the new administration had a chance to review the situation. Although I understood the reasoning, I would have preferred that the government not get involved and was disappointed—but not surprised—when the Obama administration significantly increased the government intervention