10/19/2011 10:23 am ET | Updated Dec 19, 2011

Debate News Flash: Republican Candidates Repudiate Bush/Paulson TARP Giveaway

Among many amusing moments watching the Republican debate last night was seeing how they all condemned the 2008 TARP plan to bail out the financial industry. They all made it sound like it was some Democratic government giveaway, which could not be further from the truth.

The original TARP plan was conceived by the Bush Administration and its Treasury Chief, former Goldman Sachs head Henry Paulson. In a time where the entire financial system was teetering on the edge of collapse, TARP was the emergency lifeline needed to prevent chaos. The Bush/Paulson plan included very little in the way of regulations or responsibility on the part of the banks to increase consumer assistance. There was no obligation to increase consumer credit or return to other responsible banking practices. Democrats tried to put these provisions in, but were turned away. They were told not to stand in the way of this crucial legislation that needed to be passed immediately to avoid a financial meltdown. No changes were allowed. In the end Republicans were united for TARP as proposed by Bush/Paulson and most Democrats reluctantly voted because it was necessary.

What happened? Banks got the funds, but things have not got better for consumers. The banks made big profits in 2009-10 because their trading desks capitalized on low stock prices and they have mostly paid back TARP funds. What was needed in TARP was more government regulation and conditions on the TARP money, not less. The Republican candidates seemed to be seeing that TARP was government intervention in financial markets that was unnecessary. Markets, they contend, should have been allowed to straighten things out on their own. How short their memories are. In 2008 (only three years ago), the banks were in a crisis caused by unregulated market behavior. There was bipartisan agreement that something had to be done to save them from themselves.Once again, TARP was a creation of a Republican Presidential Administration, passed by a Republican Congress. It had too few regulations, not too many.

It is almost comical to see the dishonesty in the Republican candidates as they distort the facts about TARP. They seem to want to hang this on Obama, when it was created and pushed by Bush. However it is shameless lying and voters should remember that those who forget history are likely to repeat it.