NEW YORK -- On Wednesday, the Treasury Department celebrated the fact that its $250 billion investment in the nation's banking system has officially made money. What's more, the entirety of the federal government's efforts to rescue a financial system that sowed the seeds of its own demise will also eventually do the same, according to new Treasury projections.
Treasury did not, however, commemorate the hundreds of billions of dollars in taxpayer aid left to be repaid; the billions the Troubled Asset Relief Program will ultimately cost taxpayers; the extraordinary actions of the Federal Reserve and Federal Deposit Insurance Corporation that made Treasury's bank profits possible; or the fact that the entire enterprise of pumping taxpayer cash into a financial system rife with unrecognized losses will likely be remembered as a "dismal failure," in at least one Nobel Prize-winning economist's estimation.
In other words: not so fast.
The worst financial crisis since the Great Depression spurred an alphabet soup of federal programs designed to calm markets and allow banks to rely on taxpayers as credit froze and investors fled. One of those programs, TARP, became the face of the government's unprecedented involvement in the financial sector.
