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The Emergency Response That Worked

Washington’s rescue of Wall Street is almost complete — and it has been surprisingly affordable.The entire cost of the federal government’s financial rescue — not just the cost of the Treasury Dept.’s TARP program — is expected to be $89 billion, reports the Wall Street Journal’s Deborah Solomon. Solomon writes, “this includes the Troubled Asset Relief Program, capital injections into Fannie Mae and Freddie Mac, loan guarantees by the Federal Housing Administration, and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market.”

The financial rescue will cost less than government’s intervention in the comparably mild savings and loan crisis of the late 80s and early 90s. Citigroup, AIG and General Motors are all expected to return their bailout money. Only Fannie Mae and Freddie Mac, “are expected to rely on federal coffers for years.”

As I’ve blogged before, Washington leaders like Treasury Sec. Tim Geithner and Federal Reserve Chairman Ben Bernanke may begin to receive more public recognition for rescuing Wall Street if they offer better employment and foreclosure prevention programs. The Obama administration does need to focus less on Wall Street and more on “Main Street.” Still, the Obama administration — as well as the Bush administration in its final months — swiftly implemented policies that averted a catastrophe of the financial system. The federal government deserves credit for seeing through its controversial emergency response actions.

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