For a brief, surreal moment, the prevailing narrative in Washington was that the 2008-09 bail-outs were not really so bad. In September, Tim Geithner, Treasury secretary, called the government’s troubled asset relief programme “one of the most effective emergency programmes in financial history”, claiming that the final cost to taxpayers would be less than $50bn.
Steven Rattner, the Wall Street banker who oversaw the Obama administration’s rescue of the auto sector, wrote in the Financial Times in October that “without exaggeration, this legislation [establishing Tarp] did more to keep America’s financial system – and therefore its economy – functioning than any passed since the 1930s”.
But Wednesday’s document dump from the Federal Reserve – a congressionally ordered WikiLeak moment – puts this bargain-bail-out patter in a new perspective. The post-Lehman rescues were far broader than Tarp, and far riskier for taxpayers, even if the alternative of a systemic meltdown would have been worse.