TARP: A Love Story
Lessons learned after the bailout.
I first heard about TARP by rumors whispered across the trading floor and trading chatrooms, “Something spectacular is coming. You will love it.”
I was, like most bankers then, at a low, jilted by my past relationship with LUFM (Largely Unregulated Free Markets). I was looking for a rebound.
TARP wasn’t known as TARP then. It was still unnamed. But the talk was clear. It was a beautiful thing, an acronym that understood our needs.
It emerged from the rumors in September of ‘08, debuting in D.C. as the Emergency Stabilization Act. Autumn in NYC is a wonderful time to fall in love.
Like any banker, I can tell you when I first saw it, first caught a glimpse of my future love. It was on C-SPAN, late in the trading day. I was smitten immediately.
Why not? It was everything a banker could want. It was simple and rich. It understood OUR needs. $700 billion unconstrained dollars. We all swooned.
Those early days, like the start of any relationship, were rocky. TARP stumbled at first, failures that confused everyone.
It came for a vote on Sept 29th. Trading floors stood silent and watched C-SPAN. Everyone gave it the respect it deserved.
The vote started out badly, but we were confident. It would pass, we were told. It had to pass. It needed to pass. This was our new love after all.
As the vote unfolded, we wilted. It hadn’t passed. The trading floor erupted in disbelief. No, no, no. Not our TARP!
We ran into conference rooms to look for assurance from distant knowing voices in D.C. Our lobbyists were clear: Don’t worry.
This is too important not to pass. We are too important for it to not pass. Don’t worry.
That early stumble should have been concerning. Maybe it wasn’t everything? Maybe TARP had a darker side. Or, maybe it was corrupt?
No. We all admired how it picked itself up and moved forward from defeat. It only bonded us tighter. It wasn’t just beautiful. It was also ours.
TARP passed a week later and was signed into law with the plebeian name of Public Law 110–343. We all danced for joy.
It was now a marriage. TARP and Wall Street. And it proved, like any good marriage, to be a union of equals.
Both contributed. Both helped each other. Both supported each other in times of weakness. Both gave each other meaning.
Everyone I knew approved of the marriage, and if they didn’t (like my mother) they were polite about it to me.
Really though, I didn’t listen to them much if they did disagree. I, all of us bankers, were too enraptured to listen to dissent.
When somebody would say, “Well, it seems awfully unfair. I mean, you lost everything AND then got bailed out. What about the rest of us?”
I would just grimace. “No. It isn’t like that. See. You don’t understand TARP like I do. It is complex.” I was too in love.
It wasn’t until four years later, after I had left banking, that my relationship with TARP really started being questioned and tested.
By then I had a new circle of friends. I had started spending time with drug addicts, the homeless, and folks living in poverty.
I started driving all around the U.S., spending time in towns and neighborhoods many live in but few ever visit.
When I was in these towns, neighborhoods, and homes, I started listening to people, and I saw a side of TARP I hadn’t chosen to see.
I heard a uniform disgust with TARP.
After telling people 30 times, “You don’t understand, it is more complex than that,” I had to stop and think, maybe it isn’t more complex than that.
Maybe I only loved TARP because of what it gave me and my friends, which was a lot of money.
Folks who had lost so much, started asking me, “Well, where is my TARP?” I really didn’t know what to say to them.
I would try to explain: “TARP didn’t REALLY give us money. They gave it to a fund that…” By then they rightly put me down as a TARP sycophant.
Regardless, even if I could explain my love of TARP, it was clear. Nobody else outside my banker friends liked it. They hated it.
They hated it with everything they had. Some hated it with rants. But most hated it with a knowing resignation. They had seen this shit before.
It was the extreme example of a rigged system. Truck driver: “It wasn’t the needle that broke the camel’s back. It was the anvil that broke it.”
I also saw first hand why it resonated so badly with them. They were right, the system was rigged. At every level.
There really were two Americas. Two opportunity sets. Two education systems. Two legal systems. Two sets of rules.
The elites (Sorry about that word) got the better of it all. Better opportunities. Better educations. Better laws. Better bailouts.
And TARP was just a continuation of that, regardless of the relative merits of it at the time.
It represented how shit plays out in America: If you have money, you get cut all the breaks. If you don’t, you suffer all the breaks.
Nobody wanted to hear, “You know TARP benefited you too…” They have heard that shit all their lives. Everything is spun that way.
Me: “Really, it was also the best policy for you.” Them: “Funny how the person telling us that is always sitting on a pile of gold while we stand in shit.”
So regardless of what I think about the past beauty of TARP. The reality is: TARP was all about maintaining two separate and unequal systems.
So I look back at that distant day on the trading floor, when I first fell in love with TARP. It was only a marriage of convenience. For me.
I look back at that young banker and think. Damn he had it good. Damn he had it so easy. Damn he was so naïve. Damn did he ever love that TARP.
And damn if that TARP didn’t ever love him back.
Chris Arnade received his Ph.D. in physics from Johns Hopkins University in 1992. He spent the next 20 years working as a trader on Wall Street. He left trading in 2012 to focus on photography. His “Faces of Addiction” series explores addiction in the south Bronx neighborhood in New York City. Follow him on Twitter: @Chris_arnade