Obama: Bank Bailout “Necessary,” Iraq War “Dumb”


“If there’s one thing that has unified Democrats and Republicans — and everybody in between — it’s that we all hated the bank bailout. I hated it. You hated it.” — President Barack Obama, Jan. 27, 2010

“I don’t oppose all wars. … What I am opposed to is a dumb war. What I am opposed to is a rash war.” — Illinois state Sen. Barack Obama, Oct. 2, 2002

This week the watchdog of the Troubled Asset Relief Program, Neil Barofsky, submitted his quarterly review and testified before Congress. In England, former Prime Minister Tony Blair also testified — for six hours under cross-examination — at a widely anticipated inquiry into the Iraq War.

TARP and the war in Iraq, begun with bipartisan congressional support, are now unpopular. In both cases, proponents argued that without action, we risked greater danger. President Obama defends TARP, which he voted for in the Senate and has expanded as President. But he bemoans having inherited a war he called “dumb.”

Under TARP, the federal government committed hundreds of billions of dollars to bail out financial institutions. But for this bailout, argued the Bush and Obama administrations, banks would stop lending, and our entire financial system faced collapse — directly affecting all Americans.

Watchdog Barofsky, when asked last fall whether TARP was “working,” said: “It really depends on your perspective. We were told by Treasury that the point was to increase lending. … Today we hear that the purpose of TARP was to prevent systemic collapse.” Lending has not increased, he said, but “it appears that we’ve avoided a total systemic collapse (emphasis added).”

Is TARP, then, a success?

Barofsky’s report to Congress says that TARP can only be called a success if the program “is both managed well and its positive effects are enduring.” Let’s set aside the highly criticized management of the program.

Will TARP have “enduring positive effects”?

The argument for the bailout is that some institutions were “too big to fail.” But Barofsky now says: “These banks that were too big to fail are now bigger. Government has sponsored and supported several mergers that made them larger. And that guaranteed that implicit guarantee of moral hazard. The idea that government is not going to let these banks fail … is now explicit. … In a lot of ways, the government has made such problems more likely.

Potentially, we could be in more danger now than we were a year ago.”

So did TARP save us?

“Even if TARP saved our financial system from driving off a cliff back in 2008,” writes Barofsky, “absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.”

As to the Iraq War, former Prime Minister Blair’s detractors — during his testimony — shouted “liar” and “murderer.” Blair stood his ground. He denied that he and President Bush decided on war irrespective of whether Saddam Hussein complied with the final U.N. resolution. He acknowledged mistakes in intelligence and in the execution of the war.

Wouldn’t Saddam, left in power, have provided leverage over Iran?

“Let’s be clear,” Blair said. “There’s another view of foreign policy in this instance, which is if we’d have left Saddam in place, he would have controlled Iran better. I really think it’s time we learned, as a matter of sensible foreign policy, that the way to deal with one dictatorial threat is not to back another.”

Would you make the same decision?

“Don’t ask the March 2003 question, but ask the 2010 question. Suppose we back off. What we now know is that he retained absolutely the intent and intellectual know-how to restart a nuclear- and chemical-weapons program when inspectors were out and the sanctions were changed. … This isn’t about a lie or a conspiracy or a deceit or a deception. It’s a decision. And the decision I had to take was could we take the risk of this man reconstituting his weapons programs or is that a risk that it would be irresponsible to take?”

Any regrets?

“The decision I took — and frankly would take again — was if there was any possibility that he could develop weapons of mass destruction, we should stop him. That was my view then, and that is my view now. … (I feel) responsibility, but not regret, for removing Saddam Hussein. I think that he was a monster. I believe he threatened not just the region but the world.”

Both the Iraq War and TARP are monumental decisions with far-reaching consequences. We don’t know what would have happened had we not bailed out the banks. We don’t know what would have happened had we not gone into Iraq. But even in opposing the Iraq War back in 2002, Obama said, “The world and the Iraqi people would be better off without (Saddam).”

Well, are we better off with TARP? It sure seems as if we are driving on the same winding road — only “in a faster car.”

  • http://shmuelkatz.com Cryfelder

    What worries about Iraq is that the government that is now there is going to be a Sharia observing, jihadist sympathizing, government. Religion plays a big part in the makeup of the leaders there, and unfortunately the religion has problems.

  • USMCSniper

    Thanks to the Obama administration and an out-of-control liberal judge, ACORN and other leftist activist groups –including the embattled radical group ACORN– could be eligible for up to $3.99 billion in federal funding included in the $3.83 trillion fiscal 2011 budget blueprint President Obama released Monday.

    The $3.99 billion comes from a congressional slush fund known as the Community Development Block Grant (CDBG) program for community organizers.

    Get rid of this stinking white house clandestine muslim chimpout and the feces colored caucus before they ruin the country completely

    • http://intensedebate.com/people/bubba4 bubba4

      I never really followed up on that case of the ACORN videotapes. What happened with that Sniper? After all, I thought that those tapes were the long awaited evidence of what you "knew" to be true all along.

      What happened to your hero O'keefe?

  • bardefa

    ANOTHER WHOPPER:
    NEWS:
    "The overall unemployment rate dropped to 9.7% in January, but the job market shed 20,000 more jobs than it created."

    HOW CAN THE UNEMPL. NUMBER GO DOWN, IF more JOBS WERE LOST?

    Anything to keep it officially (reality: about 25%) under 10%, O'bummer?
    And how Pelosi knows that somebody gave up the job search? Another big one.

    • http://intensedebate.com/people/Rifleman Rifleman

      I think you know how, the number of people who moved to the unemployed and not even looking for employment category went up. That category isn't part of the statistic they cite.

      For the msm/dp public perception is reality. They created the public perception that hussein was smart and qualified to be POTUS, and you see how that's working out.

    • http://intensedebate.com/people/bubba4 bubba4

      No state is at 20% unemployment. Some states it goes up and some it goes down. It is hard to keep an actual number because sometimes people run out of unemployment or they get some shitty part-time job and stop registering as unemployed though they are only partially employed.

      Obama as President has drive you all mad. You would rather America suffer and hope for it, then abandon your nonsense.

  • johncarens

    I remember well when Paulson came before the American people and said that $750 billion would somehow "save" a $14,000,000,000,000 annual economy. It didn't make any sense then, and it makes no sense now. What he seemed to be saying was that the 10-day debt float was missing. But, this didn't make any sense, either, because people were still making deposits, and generating economic activity.

    I think what it boiled down to was this: There were some 800-pound gorillas that SHOULD have failed (Goldman-Sachs, first and foremost), but were sufficiently well-connected politically to scare enough ignorant members of the Governing Class into covering their asses for investing in laughably risky securities. We can argue as to WHY they did this, but in the end, the taxpayer took it in the neck like they always do.

    What confuses me, though, is why bond raters like Moody's gave these mortgage-backed derivatives such glowing reviews. In my estimation, I think this calls into question Moody's infallibility, and whether or not they have certain horses in the race. But, in the end, TARP didn't do a thing for which it was advertised, which mainly was: Rescue troubled assets. Foreclosures have been running at record-breaking speed for nearly 18 months now, and it only seems to be getting worse. But, on the other hand, the arbitrageurs and multi-national banking conglomerates roll merrily on.

  • 080

    I don't think that the initial bank bailout was wrong. Bernanke acted with the example of the Great Depression before him. That was when the Federal Reserve sat on their hands while the economy collapsed from 1929 to 1933. When Milton Friedman asked some one at the Fed why they didn't act, the response was that they were waiting for an emergency. Since Feb. l the bond crisis in Europe is raising the question of the American bond market. Long term bonds are plunging. Greece's budget deficit is just about the same as ours. If the bond market collapses then the real trouble begins. The other day on a website entitled "economicroadmap.com" a video of Ron Paul appeared in which he stated that the might be some kind of uprising ahead. As far as the banks are concerned "When the music plays, everyone has to get up and start dancing" The music is the flood of money being produced by the government (the Fed Reserve cannot exceed the debt limit unless the congress approves). Two things have to happen. (l) cut taxes (2) stabilize the dollar as the international currency. Thatt's what Ronald Reagan did under similar circumstances and we had 25 years of prosperity.

  • http://intensedebate.com/people/JosephWiess JosephWiess

    Putting aside the stupid waste of money that TARP is, I'd like to concentrate on the Iraq/Afghanistan situation. In my research, I have found out that neither "War" was declared by congress and signed by the president. This makes both "Wars" illegal under the constitution. I think it's time to call our soldiers home from every corner of the globe and let them spend some time at home.
    And the next time we want to help a country, we actually need to declare war against that country.

  • http://intensedebate.com/people/Rifleman Rifleman

    Good question, easily answered by a map. We had a significant portion of our forces tied up in Kuwait and SA, 'containing' saddam, and only amphibious access to Iran. Iran has around three times the population of Iraq and more formidable terrain, a purely amphibious operation would be problematic. We couldn’t decisively engage the mad mullahs and leave saddam in our rear.

    Gotta run, but you're right. The main target in any serious GWOT would have to be the mad mullahs and IRG, because they are the biggest supporters of terror in the world. You may also notice that would give overland access to Afghanistan and the terror havens in Western Pakistan. Military strategy is governed mostly by logistics, lines of communication (ports, highways, railroad lines…), and terrain, so it makes for some predictability.

  • http://intensedebate.com/people/Rifleman Rifleman

    She ain't dead ye t;-)

  • http://intensedebate.com/people/Rifleman Rifleman

    Me threaten the Republic? Not a chance, I'm hopin' she'll still pull through.

  • http://intensedebate.com/people/bubba4 bubba4

    I hadn't thought of this, but it is a time saver reposting things you posted on previous days. Thanks Linda…