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The Deal: White House Defends Financial Crisis Response

The report praises the system set up post-crisis by the FDIC to help dismantle a failing bank so that its collapse doesn't cause damage to the system. But while many observers had hoped that a bank fund would be established in advance for just such a contingency, Dodd-Frank mandated that fees be collected after-the-fact, leaving many to believe taxpayer fund might still be employed to dismantle a failing big bank. Plus, critics say, a future Treasury Department might not have the willpower to go after the banks for fees.

Opponents also say that, not unlike what happened in the past crisis, government could employ a so-called "backdoor" bailout, by funding large institutional bank creditors and counterparties of a failing bank out of fear that they might collapse as well. That was one of the impetuses for the AIG bailout, which ended up being a staggering $182.3 billion sum, as well as other large banks. (The report said the Administration recouped more than $205 billion on the AIG bailout alone).

The administration report also said that its efforts to restore the auto sector, which was on the brink of collapse, created jobs, with the big three auto companies now profitable and gaining market share "for the first time in 20 years."

Critics of the auto bailout point to a Treasury watchdog group report from January that noted that the White House has no "concrete exit plan" for its taxpayer-infused investment in Ally Financial -- formerly known as GMAC. The Treasury watchdog report noted at the time that Ally owed taxpayers $14.6 billion. In response to concerns about the auto bailout, Sperling said due to the "bold actions" by the Federal government and by the workers and companies, the auto rescue "has worked out better than anyone could have dreamed of."

--Written by Ronald D. Orol

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