Looks Like the Last Time

If you were wondering how the government's administration of the TARP compared to the last major intervention in the banking system -- the Resolution Trust Corporation formed to get the banking system through the Savings and Loan crisis -- David Altig has an excellent summary of the RTC's evolution. He concludes:

So there you have it. The last great experiment in working through financial crisis took longer than expected, involved some accounting pushing and shoving at the outset, confronted a skeptical Congress, and cost more than initially projected, but quite a lot less than feared.

Make of it what you will.

In particular, estimates of the cost of the program rose steadily, from $50 billion to $155 billion, before declining to around $90 billion. I suspect that the estimated cost of the TARP (along with estimates of bank losses generally) will follow a similar trajectory.

Of course, you might say that the TARP represents an insufficient solution to the crisis -- that further government investments will be needed to save the banking system. And you might be right. But as James Surowiecki has noted, the government's intervention in the early 1990s did not include a rescue for the big moneycenter banks, which were arguably insolvent at the time, but which earned their way out of trouble.

Make of that what you will.