Yesterday, in the popular culture course, a student noted that the 
banks have largely paid back the money they received from TARP and that the government has been earning a profit on the bank portion of the bailout. This is, for the most part, accurate. ProPublica keeps regular track of bailout money that has been dispersed and that has been returned. If you click the “recipients” tab in the upper right hand corner, you will see a chart of every “bailed out” recipient along with the amount either still owed or paid back. Many of the largest banks have netted the government a profit.
But the larger question is who benefitted most from the bailouts, how, and why? The former chairperson of the FDIC, Sheila Bair, was on the Bill Maher show on October 12. This ten minute interview covered a lot of ground and made some alarming conclusions. [I can’t link to the show itself, but the podcast of the episode, #262, is available on iTunes. The interview with Bair begins at 32:30 mins]. During her time as chairperson, Forbes labelled Ms. Bair “the second most powerful woman in the world.” She reports to Bill Maher that the bank bailout was “the most distasteful thing I ever did,” in part becasue “nobody (in the financial industry) took any losses, except for Lehman Brothers.” The bailouts have failed to create a stable banking system, and instead have created a moral hazard.
On the same day that Bair appeared on Real Time, the NYT carried an article about Bair by Gretchen Morgenson (who has, herself, written extensively about the financial crisis and the bailout). Bair concludes about the bailout: “The balance of power has shifted too far in favor of large financial interests… The bailouts have overwhelmingly benefitted the upper classes… workers, homeowners, (and) small business owners have, by and large, been left to fend for themselves.” [Emphasis added]. Neither presidential candidate, Bair laments, is talking about financial reform.
A few other sources on the financial crisis that are worth reading:
1. The Monster, by Michael Hudson reads like a thriller and effectively demonstrates the personal impact of the financial sector’s malfeasance (particularly for middle-aged and elderly people across the country who lost their homes when predatory lenders called them with false promises of low-cost loans that they knew could never be paid back).
2. Reckless Endangerment, by Gretchen Morgenson.
These are just a few of the titles that have tried to grapple with the financial crisis and resultant bailouts. It may take years before we fully understand exactly what happen and what the net result was. But, the inescapable short-run conclusion is that financial capital fortunes stabilize and even increase with government help while the working class and the middle class was largely abandoned.
ronnerio 
Many political figures have attempted to mitigate the antagonism that has stemmed from the evolution of corporate capitalism; thereby contesting where the concept of liberal democracy stands in America. As a strong advocate of this sort of Hayekian Laissez-Faire market perception; in which people should be free to pursue their own ends with minimal state intervention, I was pretty confused as to why the government would bail out these big banks who became rich by lending money irresponsibly and now they get rewarded for it? All that really did was put a temporary band-aid on an issue that needed a permanent solution. These “corporate handouts” instilled this belief that corporations are “too big to fail” by rewarding them instead of penalizing them for their actions. If any small business fails and declares bankruptcy the government is not going to take money and say here, next time be careful. If a college student defaults on his loans because he/she cannot find a job the government is not going to say it’s ok don’t worry about your loans. NO, they will levy your wages and garnish anything you or your family own as long as they get paid. This is exactly my point! Whatever happened to this free-market ideology?
To illustrate how the law is manipulated by corporate power, the establishment of Fannie Mae and Freddie Mac to the Community Reinvestment Act of 1977. This act essentially forced banks to make loans to those “risky borrowers” who either had bad credit or did not make enough money to afford a paying a mortgage. Cognizant of the potential turmoil this could bring banks continued to provide mortgages. These mortgages were “safeguarded” by mortgage-backed securities that were purchased by large investment banks such as Fannie and Freddie. The value of these securities was contingent on the mortgage payments being “payed in full.” However, when the housing bubble burst, as every bubble is meant to burst, people were left with mortgages they couldn’t afford to pay and the banks foreclosed their homes. Since the housing market is an organic component of the private sector, this collapse had a domino effect that caused big banks who had invested in these securities to collapse as well. With the excuse to prevent “market instability” the government bailed out all of these big banks that had collapsed at the expense of the tax-payer. These bail outs must have Federalist such as James Madison rolling in their graves. Madison argued that we needed to create and protect a strong state that will safeguard against the potential tyranny of majority factions (Federalsit #10) who, as more power is gained, can potentially act in such a way as to pursue their own interest thus diminishing the rights of those who lack the resources for their voices to be heard. This just shows that the market will never favor those with fewer resources. The expansion of corporate capitalism places the political agenda in a way that favors the demands of those leading groups at the expense of others. This inequality will only continue to grow unless we stand up against the government that we created…