This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: White House Defends Financial Crisis Response

Stocks in this article: AIG

NEW YORK ( The Deal) -- On the five-year anniversary of the failure of Lehman Brothers, the White House on Sunday defended its actions to stem the aftermath of the 2008 financial crisis, arguing in a new report that bank stress tests, a post-crisis reform statute and the government's administration of a much-maligned auto and bank sector capital injection program were critical moves and helped stave off another Great Depression.

The report comes as critics contend that five years after the peak of the financial crisis many big banks still lack sufficient capital as a buffer against a future collapse. At the same time, the Dodd-Frank Act, the signature post crisis-reform statute, is still far from fully implemented.

Opponents of the Obama administration's response to the crisis also lament that the capital injection program, known as the Troubled Asset Relief Program, enshrined the belief that big banks -- many of which are even larger than before the crisis -- are too-big-to-fail and would be bailed out again with taxpayers footing the bill.

That is even as the report points out that the government has set up a series of tools to allow a big bank to be dismantled so that its collapse doesn't cause Lehman-like collateral damage to the markets. Plus, taxpayer costs in the unraveling of the institution would be covered by a fee (collected after-the-fact) on big banks.

Specifically, the White House argued that the TARP program was far more successful than anyone expected, pointing out that the Congressional Budget Office had estimated previously that it would cost $350 billion, while the Treasury Department has received nearly $422 billion in payments back from the government's investments in the bailout program and separate injections into American International Group (AIG).

Gene Sperling, White House national economic council director, lauded the administration's effort to stress test banks, calling it "the signature element" of the financial stability program. He told reporters on a conference call held to discuss the report, that it drove the big banks to raise $80 billion in capital from private sources within months of the release of the first set of results in 2009.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs