Now, was the system set up incorrectly where we could end up in such a mess? Yes. But that wasn't the fault of any one politician or group of politicians at any one time. The problems leading up to the crisis built up in different ways over time. The financial reform President Obama has pushed through addresses some of these issues, for example, by allowing the government the power to break apart and unwind large "too big to fail" type entities without bailing them out with taxpayer funds. When you look at it this way, Congress and both the outgoing and incoming administrations did do what was best for the country, even if unpopular on the surface. This doesn't even get into the fact that a lot of that initial money has been, and continues to be paid back, and in some cases even turns a profit.
Well, maybe.
But let's just say it's true for now. Even if that's the case, those organizations could have been liquidated and their assets sold off, perhaps with the key pieces under some sort of guarantee from the Federal Reserve or Treasury or "Bureau of Stabilizing Home Interest and Trust" or whatever feel-good label/acronym these messes are typically labeled.
The organizations that made bad bets should've been liquidated, even if you believe the catastrophe scenario (which I'm skeptical of personally).
Plus, the "total collapse" argument was BS. We'd be further along if the feds had allowed the banks to fail (while protecting individual depositors) and reorganized them. We did it this way with the RTC in the 1980s and Sweden did it in the 1990s.
In the moment? Anyone who voted against that bill was either posturing or a madman. I mean, we got the money back anyways, most of it. Why play chicken?
Wrong, and many well respected economists will tell you you're wrong.
Yes and other well respected economists (at least at the time) told that we were in a "Great Moderation":
Economists agree: Legislation Reid led to passage prevented economic collapse
Excerpts:
Krugman: Government intervention helped avert "second Great Depression." In his August 9, 2009, New York Times column, Nobel laureate Paul Krugman wrote that governmental actions kept the U.S. from going into "a second Great Depression"
...
Blinder and Zandi: Policies "probably averted what could have been called Great Depression 2.0." In July, former Federal Reserve vice chairman Alan Blinder and Moody's Analytics chief economist Mark Zandi issued a report citing analytic models to demonstrate that the "multifaceted and bipartisan" response to the financial crisis, including the Troubled Asset Relief Program and the American Recovery and Reinvestment Act - both of which passed the Senate under Reid's leadership -- had a "huge" effect on real GDP, jobs, and inflation, and "probably averted what could have been called Great Depression 2.0"
...
U.S. Chamber president: Stimulus needed because "we thought we were days away from a global recession."
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AEI's Malkin: Policy response "averted" global depression. From a January outlook report by the American Enterprise Institute's John H. Malkin
...
Nowakowski: Policies have "averted depression." In a September 13 column, David Nowakowski, director of credit strategy at Roubini Global Economics, wrote that the Federal Reserve's fiscal policies, "along with the fiscal stimulus," have "averted depression, reversed a short bout of deflation, and helped unemployment from reaching 1930's levels."
...
Romer: Policies made difference between recovery and "second Great Depression." In her September 1 farewell speech, Christina Romer, outgoing chairman of President Obama's Council of Economic Advisers, praised the stimulus package and the Obama administration's use of TARP funds and said: "I am proud of the recovery actions we have taken. I believe they have made the difference between a second Great Depression and a slow but genuine recovery.
I don't know much about Christina Romer, but is there any reason to believe she and Krugman constitute a "range" of economists?
T.A.R.P. was started and passed under George W. Bush. The people advising him, including Henry Paulson his Secretary of Treasury, and Federal Reserve Chairman Ben Bernanke were telling him the same thing. See here:
http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
My point in posting here is not about partisanship, but about accuracy. Economics is a science -- not an exact one, but a science nonetheless. At its core economics is not about partisanship at all. People can probably turn anything under the sun partisan, but that's their problem. Believe it or not some people are able to focus on doing their job (and providing their opinion) in the interest of the country above partisanship, like current Secretary of Defense Robert Gates who is a Republican. Economists advising both sides of the aisle support the position I've outlined. I'm not going to to look them up for you, but you can feel free. I'll start you off. Look for the comment near this one by jbooth http://news.ycombinator.com/item?id=1901677.