POLITICS - TARP Blowback 2010

"Bank Bailout Is Potent Issue for Fall Elections" by CARL HULSE & DAVID M. HERSZENHORN, New York Times 7/10/2010

Excerpt

The vote in 2008 to bail out Wall Street was framed as the only way to avert an economic meltdown and relieve financial institutions of their most poisonous holdings. For many members of Congress, it turns out that the vote itself was toxic.

Nearly two years after Congress approved the Troubled Asset Relief Program, the Bush administration’s $700 billion program to rescue the banking system at a moment when it appeared close to collapse, lawmakers from both parties who backed it remain haunted by the vote.

Republicans for months predicted that a backlash against the Democrats’ big health care law would be the defining issue in this year’s Congressional campaigns. But the bipartisan TARP vote has become a more resonant issue in a year when anti-incumbent, anti-Washington sentiment is running strong.

Democrats who voted for the bailout — which was championed by their own leaders along with President George W. Bush and Senator John McCain of Arizona, then the Republican presidential nominee — are now facing attacks from Republican challengers on the campaign trail. Republicans who voted for it are being accused of promoting big government and fiscal irresponsibility by Tea Party candidates and other conservatives.

Emotions can run high over the subject. Lawmakers report being buttonholed over bailouts by confrontational constituents, and Senator Robert F. Bennett, Republican of Utah, was jeered at a party convention by people chanting “TARP, TARP, TARP.”

“It became a litmus test of fidelity to free enterprise principles,” said Representative Bob Inglis, a South Carolina Republican who was crushed in a primary last month partly because of his vote in favor of the plan.

While banks have paid back most of the money, and the bailout is widely credited with having helped to prevent a financial calamity, support for it has become among the biggest issues in the 2010 midterm elections, a powerful if simplistic way to attack what some see as government excess, misplaced priorities and a loss of trust between voters and elected officials.

NOTE: TARP, although supported by Democrats, was a President G.W. Bush and Sen. McCain supported bill.