Commentary: TARP wasn't perfect but it eased crisis

For candidates in both parties, Washington's response to the meltdown of 2008 — the Great Bailout — has become a favored whipping boy. Many incumbents in both parties who voted for the now-infamous Troubled Asset Relief Program are back on their heels, defending their vote.

Some, like Republican Sen. Robert Bennett of Utah, have already been unseated by their own parties in part because of their support for TARP, although Bennett had the additional problem of being an "appropriator" and a generator of earmarks.

Here in Missouri, Democratic Senate candidate Robin Carnahan is criticizing her opponent, Roy Blunt, for his vote in favor of TARP. Yet it's worth looking back at the choice lawmakers faced in the fall of 2008.

In September, the collapse of Lehman Brothers triggered what became a worldwide credit-market meltdown. Banks, afraid they wouldn't be paid back, stopped lending to other banks. Interest rates in overnight interbank markets skyrocketed.

Many Americans still believe the panic was mainly about "the Wall Street banks," meaning a problem beyond their immediate concern.

That's a misconception. One of the markets that had frozen up was that for commercial paper, which many companies tap to obtain cash for short-term needs.

Building companies need short-term loans to buy materials. Companies need money for restocking inventories. Firms that are owed money need cash to use while they wait for their accounts receivable to be paid.

But more to the point, commercial paper also finances many payrolls.

This means that as Congress gathered to consider whether to approve TARP, which authorized up to $700 billion in spending, millions of American workers faced the prospect of paychecks that would bounce, or might not arrive at all.

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