October 3, 2008: The Troubled Asset Relief Program (TARP)

U.S. Department of the Treasury Building,

across 15th Street in Washington from the White House.

The Statue is former Secretary of the Treasury Albert Gallatin.

October 3, 2008: President George W. Bush signs the Troubled Asset Relief Program (TARP) into law. It turns out to be key in preventing the current economic recession from turning into a flat-out depression.

TARP allowed the U.S. Department of the Treasury to purchase or insure up to $700 billion of "troubled assets,", defined as "(A) residential or commercial obligations will be bought, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."

In short, this allowed the Treasury to purchase illiquid, difficult-to-value assets from banks and other financial institutions. The targeted assets could be collateralized debt obligations, which were sold in a booming market until 2007, when they were hit by widespread foreclosures on the underlying loans. TARP was intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses.

TARP did not allow banks to recoup losses already incurred on troubled assets, but officials expected that, once trading of these assets resumed, their prices would stabilize and ultimately increase in value, resulting in gains to both participating banks and the Treasury itself.

The concept of future gains from troubled assets came from the hypothesis in the financial industry that these assets were oversold, as only a small percentage of all mortgages were in default, while the relative fall in prices represented losses from a much higher default rate.

The U.S. House of Representatives voted 263-171 to approve it, and the Senate did so, 74-25. While there were archconservatives who voted against it out of not caring who got hurt through business failures, and there were liberals who voted against it out of not wanting to give the Republicans a win, as the election was just a month away, these concerns were overwhelmed by a desire to do the right thing.

TARP became known as simply "The Bailout." After the election, archconservatives, calling themselves "The Tea Party," blamed the new President, Barack Obama, for it, even though he had nothing to do with it, other than being 1 vote for it in the U.S. Senate -- as was his opponent, John McCain.

Nevertheless, in a 2012 survey of leading economists conducted by the University of Chicago Booth School of Business' Initiative on Global Markets, economists generally agreed that unemployment at the end of 2010 would have been higher without the program. In other words, Bush, McCain and Obama, agreeing on little else, were all right about TARP, while the hard right wing was wrong.

Also bailed out was the American auto industry, including each of the "Big 3": General Motors, Ford and Chrysler. How come, since the federal government took over, and then gave control up after it worked, we no longer hear conservatives say, "What's good for General Motors is good for America"?

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October 3, 2008 was a Friday. There were 2 American League Division Series games played, both Game 2 in their respective series. The Tampa Bay Rays beat the Chicago White Sox, 6-2 at Tropicana Field in St. Petersburg, Florida. And the Boston Red Sox beat the Los Angeles Angels of Anaheim, 7-5 at Angel Stadium of Anaheim.

There were 2 college football games. Number 8-ranked Brigham Young University (BYU) beat Utah State, 34-14 at Romney Stadium in Ogden, Utah. USU named its stadium after Dick Romney, their head football and basketball coach and athletic director from 1919 to 1948. He was a first cousin of George Romney, father of Mitt Romney, and had a brother named Milton Romney, who was known as "Mitt" and played in the NFL in the 1920s. In 2015, the stadium was renamed Maverik Stadium, after a chain of Rocky Mountain-based convenience stores. Apparently, in Utah, greed is more powerful than even the Romney family.

In the other game, the University of Cincinnati beat Marshall University, 33-10 at Joan C. Edwards Stadium in Huntington, West Virginia. A big donor to Marshall, Joan Edwards was not related to LaVell Edwards, the former head coach for whom BYU renamed their stadium.

And the football team at East Brunswick High School, my Alma Mater, lost to South Brunswick, 17-7 at Mike Elko Stadium in South Brunswick, New Jersey.

August 6, 1993: The Clinton Budget Passes

August 6, 1993: After passing the House of Representatives the night before, President Bill Clinton’s Fiscal Year 1994 Federal Budget passes in the Senate. In each house, it passed by exactly 1 vote, with a few Democrats deserting, and not 1 Republican in either house voting for it: 218 to 217 in the House, and a 50-50 tie in the Senate, with Vice President Al Gore breaking the tie to pass it.

At the time, conservatives were saying that the tax increase would plunge the nation into a recession -- which it was already in. As usual, they were wrong: The greatest economic boom in the nation's history occurred from 1993 to 2000.

One thing that both sides got right, though, was the line, delivered by Representative Bill Richardson of New Mexico: "This is the Clinton Presidency." It all depended on this: Had the budget failed, the boom might not have happened, and Clinton would have lost in 1996. Instead, he was re-elected in a landslide.

Among the bill's floor leaders in the House were Richardson, who would later serve as Clinton's Secretary of Energy and the Governor of his State; Chuck Schumer of New York, who was elected to the Senate in 1998, and became Senate Democratic Leader; and Richard Durbin of Illinois, who was elected to the Senate in 1996, and became Senate Democratic Whip.

The Republicans rode opposition to Clinton's tax increase and big spending, and to his failed health care initiative, to win the 1994 Congressional elections. When Clinton was re-elected in 1996, it was a "personal landslide": He failed to bring either house of Congress back with him. And that would turn out to be a problem later on.

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August 6, 1993 was a Friday. These Major League Baseball games were played:

* The New York Yankees lost to the Minnesota Twins, 4-3 at the Metrodome in Minneapolis. Kevin Tapani outpitched Bob Wickman. Kirby Puckett went 3-for-3. Dion James and Paul O'Neill hit home runs for the Yankees, but Don Mattingly went 0-for-4.

* The Baltimore Orioles beat the Cleveland Indians, 8-1 at Camden Yards in Baltimore. Cal Ripken went 3-for-5 with 2 RBIs.

* The Montreal Expos beat the Atlanta Braves, 8-2 at Atlanta-Fulton County Stadium. Kirk Rueter outpitched John Smoltz.

* The Florida Marlins beat the Philadelphia Phillies, 4-3 at Joe Robbie Stadium (now Hard Rock Stadium) in Miami Gardens, Florida.

* The Toronto Blue Jays beat the Milwaukee Brewers, 11-10 at the SkyDome (now the Rogers Centre) in Toronto. The Brewers scored 2 runs in the top of the 11th inning, but the Jays scored 3 in the bottom half, the winning run coming on a single by John Olerud that scored Devon White. Rickey Henderson went 1-for-5 with 2 RBIs. Paul Molitor went 3-for-5 with a home run and 2 RBIs against his former team. Robin Yount, in his last season, went 3-for-5 with a walk and an RBI.

* The Detroit Tigers beat the Boston Red Sox, 5-1 at Tiger Stadium in Detroit.

* The California Angels beat the Chicago White Sox, 7-3 at the new Comiskey Park (now Rate Field) in Chicago.

* The Chicago Cubs beat their arch-rivals, the St. Louis Cardinals, 6-4 at Busch Memorial Stadium.

* The Oakland Athletics beat the Kansas City Royals, 5-2 at Kauffman Stadium in Kansas City. George Brett, in his last season, went 2-for-4.

* The Texas Rangers beat the Seattle Mariners, 5-3 at Arlington Stadium in the Dallas suburb of Arlington, Texas. Ken Griffey Jr. went 1-for-4.

* The San Diego Padres swept a doubleheader from the Colorado Rockies, 6-3 and 6-2 at Jack Murphy Stadium in San Diego. Over the 2 games, Tony Gwynn went 5-for-8 with 2 walks and an RBI.

* The Los Angeles Dodgers beat the Cincinnati Reds, 3-2 at Dodger Stadium in Los Angeles.

* The San Francisco Giants beat the Houston Astros, 4-3 at Candlestick Park in San Francisco. Barry Bonds went 1-for-3 with a walk.

* And the New York Mets and the Pittsburgh Pirates were rained out at Shea Stadium. The game was made up the next day as part of a doubleheader. The Pirates won the opener, 2-1. The Mets won the nightcap, 10-8.