Critics of the Treasury’s $700 billion bailout—and there are so many of them these days—grouse that it’s done nothing but line the pockets of undeserving bankers. “Maybe I’m missing something,” writes Steven Pearlstein of the Washington Post, “but I don’t see how it’s possible to rescue the banking system without rescuing banks.” The TARP isn’t fair, it hasn't "magically" prevented foreclosures and opened the credit taps, but it’s done its job: stabilizing the system.
Critics ludicrously charge that banks are just “sitting” on the government’s money, rather than loaning it out. But the reason banks got in this mess is because they didn’t have high enough cash reserves. Unless the government wants to run the banks themselves, it’ll have to trust that, once the reserves reach comfort level, banks will lend again. Which they will, because “sitting” on money isn’t a great way to make more of it.