With TARP so unpopular how will Americans deal with the next financial crisis?

Jeremy Hobson of public radio’s Marketplace program looks back on the Troubled Asset Relief Program (TARP) and its unpopularity despite success at stabilizing American banks and preventing the unemployment situation from becoming worse.

Let's go back to Sept. 24, 2008.

Then-President George W. Bush: Good evening. This is an extraordinary period for America's economy.

The nation's largest banks were failing. AIG, Fannie Mae and Freddie Mac had been seized by the federal government. The stock market was on the fritz and credit was drying up. All because the mortgages, or troubled assets, being held by banks were losing value fast.

President George W. Bush addressed the nation from the White House.

Bush: Our entire economy is in danger. So I propose that the federal government reduce the risk posed by these troubled assets and supply urgently needed money, so banks and other financial institutions can avoid collapse and resume lending.

The original plan for TARP was to buy those toxic mortgages from the banks so they'd have nice clean balance sheets and could operate normally. In the midst of a presidential election, though, members of both parties were uneasy about the plan.

Jonathan Alter is the author of the new political book "The Promise."

Jonathan Alter: Barack Obama told me in an interview that he knew that it would be toxic politically for him to back the TARP bailouts, but he also knew that it was necessary to prevent a depression.

Even the House Republican Leader John Boehner, who now decries TARP, pleaded with his members to vote for it.

John Boehner: If I didn't think we were on the brink of an economic disaster, it would be the easiest thing in the world to me to say no to this. But I believe the risk in not acting is much higher than the risk in acting.

But Congress wasn't swayed, and voted TARP down at first. By the time a package was passed, buying up mortgages would have been too time-consuming. So the government decided to temporarily pump money directly into the banks.

And Mark Zandi of Moody's Analytics says that turned out to be a slam-dunk success.

Mark Zandi: The banking system stabilized. If it had not gotten that equity, it would have collapsed and taken the economy with it. We'd be in a measurably worse place.

Zandi, who advised John McCain in 2008, has actually done the measurements. He did a study with a former Clinton Administration economist on where we'd be without TARP. It found there would be 8.5 million fewer jobs than there are now and the unemployment rate would exceed 15 percent.

Zandi: By bailing them out, we bailed ourselves out.

And Zandi says we're likely to make money on the bank bailout part of TARP. As for the parts of TARP that have nothing to do with Wall Street? Well, there were about $80 billion in loans to the auto industry. It's not clear if that will be repaid in full. And about $45 billion is slated for assistance to home owners to modify loans and prevent foreclosures.

As Mark Zandi says:

Zandi: That money is gone. We won't get that money back and we'll lose money on that.

Bottom line, out of the all the money initially made available for TARP, only about $475 billion were used. And the Congressional Budget Office expects we'll get all but $66 billion back. But maybe that's not the whole story.

Kenneth Troske is a University of Kentucky economist who sits on the congressional panel that oversees TARP. He says looking at the TARP in isolation ignores other emergency actions by the Treasury and by the Fed that made it easier for banks to repay their loans.

Kenneth Troske: If you take a very narrow view of TARP, and say "Hey, we made our money back," well a lot of the cost of tarp were shifted to other programs that have received much less attention and much less government oversight.

Still, Troske says that TARP did save our banking system. And that's why he worries for the future. Since TARP has become so unpopular, he says:

Troske: In the next financial crisis, and I do believe that there will be a next financial crisis, we will not see another TARP. And if you felt that that was a valuable way to stem a financial crisis, we've lost that policy instrument.

Though it looks like it will be front and center for the next month, since government bailouts are about the most popular thing to run against.