Robert Reich: TARP is Over, But the Bailouts Will Continue Until the Big Banks are Broken Up
TARP is Over, But the Bailouts Will Continue Until the Big Banks are Broken Up ó And Washington Knows It
Tuesday, January 8, 2013
TARP Ė the infamous Troubled Assets Relief Program that bailed out Wall Street in 2008 Ė is over. The Treasury Department announced it will be completing the sale of the remaining shares it owns of the banks and of General Motors.
But in reality itís not over. The biggest Wall Street banks are now far bigger than they were four years ago when they were considered too big to fail. The five largest have almost 44 percent of all US bank deposits.
Thatís up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent.
The biggest banks keep getting bigger because they can borrow more cheaply than smaller banks. Thatís because investors believe the government will bail them out if they get into trouble, rather than force them into a form of bankruptcy (as the new Dodd-Frank law makes possible). .................(more)