The Bailout: TARP Failing, Next Step Unclear
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The Troubled Asset Relief Program (TARP) hasn't saved the nation's major banks, and the Obama administration doesn't know what to do to save them.
That is the unusually sober takeaway in the morning's major papers following yesterday's sharp decline for banks in the stock markets. Bank stocks have been sliding all month: "The common stock of the major banks tracked by the Dow Jones Wilshire U.S. Banks Index has fallen roughly $287 billion in value since Jan. 2, a 43 percent decline in just over two weeks," reports the Wall Street Journal.
Not surprisingly, "fear" and " nationalization" are the words that crop up the most -- as in investors' fear of being wiped out by a government takeover. The Journal says, "The fact that nationalization is considered by some to be possible and is roiling markets, reflects the failures of repeated government interventions to stem a widening crisis of confidence in the banking system."
So far, the Treasury Department has spent roughly $230 billion pumping money into the nation's banks (billions more have gone to the auto companies and AIG). But, the Washington Post notes, that money "did not succeed in stabilizing the industry," and according to unnamed Obama administration officials, it's increasingly likely that the remainder of the $700 billion in bailout money won't do the trick either.
So what next?