Government Sells Last Major Stake In A Bank Post-Financial Crisis
MELISSA BLOCK, HOST:
Remember the big bank bailout known as TARP - the Troubled Asset Relief Program? Well, the Treasury Department has finally sold off its last remaining stake in a major U.S. bank. Ally Financial is independent again. As NPR's Chris Arnold reports, the Treasury says it actually came out ahead.
CHRIS ARNOLD, BYLINE: It took upwards of $17 billion to keep Ally Financial afloat. But now that the Treasury Department sold its shares, it turns out taxpayers made money on the deal. Actually, it was $2.4 billion. In fact, the government's made money on the overall bailout too, but that doesn't make MIT economist Simon Johnson a big fan.
SIMON JOHNSON: There is no way that this should be considered anything at all like a desirable, feasible, doable policy in the future.
ARNOLD: Johnson's a member of the FDIC's Systemic Resolution Advisory Committee. He has long maintained that the bailout was too easy on the banks given their role in wrecking the economy. For example, he says the government could've taken over the banks and fired all the CEOs.
JOHNSON: It's very unfair what was done, and the incentive effect is extremely bad.
ARNOLD: But Johnson is hopeful that new regulations will mean that the government's approach will be different in the future.
JOHNSON: If such a crisis happens again, then the FDIC will step in. It'll take over big, troubled banks and it will fire the management. And it will sort out the banks on that basis. That's the law going forward.
ARNOLD: Hopefully, we won't have to put that to the test anytime soon. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.