Mark Blyth in The Huffington Post:
A recent WSJ article on banks in trouble focused on the fact that many of these banks were TARP recipients: QED, TARP was bad and the bailouts didn't work. While state bashing is nothing new in the pages of the WSJ, it's worth remembering what the bailouts were actually designed to do: stop the global payments system freezing up. It was not designed to bailout some community lender in the West who got in over their heads in commercial real estate. It is also worth putting these prospective failures in perspective. The median size of these banks was $439 million. Compare that to the balance sheet of Bank of America and the combined $4.2 billion tied up in these banks is a drop in the bucket. Moreover, while 98 failing banks seem a lot, we should remember that between 1985 and 1992 2109 banks failed, so let's not get too excited about this most recent spate of casualties.
So why the focused attention on these relatively normal events? Perhaps the answer lies in the continuing campaign played so deftly by the banks and their allies to turn the largest ever private sector failure into a public sector failure, thereby getting themselves off the hook for the mess that they made. To take just two examples, the minority report of the Financial Crisis Commission blamed Fannie and Freddie for the crisis, despite the fact that the crisis hit over 20 countries and yet only one of them has Fannie and Freddie. Similarly, the global banking crisis has been turned into a crisis of profligate sovereigns, sidestepping the fact that the debt bloating states' balance sheets are bailout costs and lost revenues, not runaway social programs. Mere facts, it seems, can't compete with a good ideology. However, the WSJ may be more right than they know. The bailouts may not ultimately work, but for an entirely different set of reasons.
Also see Mark's piece in Triple Crisis, here