The full effect of the EESA has not been felt in the economy so far. Bank recapitalization, mortgage assistance, and the loosening of credit markets are the ultimate goals but so far the only tangible result of the TARP is the slight recovery of investor confidence and the stock market. Banks have been given money, but so far, nothing has happened in the credit markets. The glaring piece of the problem of finding results from the legislation is that no controls were emplaced that force disclosure and accountability for institutions.
The Treasury, again, was granted leeway to spend funds as applicable without requiring much in return from banks. On a political level, it has already proven problematic for legislators who want to show their constituents they are driving solutions to the economic problems. The lack of accountability from firms on how and where they are spending the capital means that politicians cannot display results. An example of this was seen when the Treasury asked several banks that accepted TARP funds these questions; none of the banks provided specific answers, and several of the banks said they simply did not know where the money was going.
The EESA was an attempt to replicate New Deal legislation, but has not achieved the immediate profound results that the Treasury and Congress were looking for. Pushing the bill through Congress proved to be more difficult, time consuming, and costly than the Treasury had expected, because national media brought all the congressional debates about the bill to the American public so quickly that people were able to have immediate input to their congressional leaders and affect the passing of the bill.
The passing of this legislation also exposed some political weakness in the way the Executive Branch provided leadership to legislators and the American people, because the panicked attempt to pass the bill overlooked glaring problems, and caused hiccups in the drafting of the final proposal. Moreover, the government appeared to be the root cause of some of the economic maladies and subsequently the arbiter of weak and ineffective legislation to correct the broken economy.
This was seen in the executive compensation problems that the bill intentionally excluded, and the lack of judicial oversight for accountability; both problems causing yet more heartache for politicians who are trying to generate results for infuriated taxpayers. With a little more executive leadership and all-around accountability, the government can provide solutions in time of crisis and create a system of governance for the free market to do it’s work uncorrupted.
Soraghan, Mike (01 October, 2008). “Senate Adds Renewable Energy Credits to Bailout” Silicon Valley/San Jose Business Journal. “Senate to Vote on Sweetened Plan: What if There’s No Bailout? ” (02 October, 2008) The News Tribune, Tacoma Washington. “Bailout Talks in Disarray” (25 September, 2008) CNN Money. com. Stolberg, Sheryl Gay (25 September, 2008) “Constituents Make Their Bailout Views Known” New York Times.
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