The US Treasury Needs a Better Marketing Department

Whether or not Secretary Paulson intended it, the phrase “troubled asset relief program” (TARP), from his original speech describing the program as he envisioned it, lent the standard acronym to his plan to provide liquidity to the financial system by buying illiquid distressed assets. Not a good name for the program, if you want to sell it to the American people. Relief? The banks will be on relief? After getting us into this mess? (The banks are hardly the only culprit, but in the public mind they seem to be the main one.) No way.

If it’s handled well, the program ought to make a profit. And in its current form, even if it doesn’t make a profit, the banking industry is supposed to pay for it after the fact. But even in its original form as proposed by Secretary Paulson, it should (again, if handled well) have produced a profit (although there was, of course, considerable risk of loss). Sell it as a plan to provide “relief” to banks? Why? Granted, that is its primary purpose, but it sure doesn’t sound good if you say it like that.

How about one of these alternative names?

• Distressed Assets Marketability Effort
  
• Public High-yield Asset Trust
  
• Taxpayer Opportunity Program
  
• Hidden Asset Value Effort
  
• Committee for Liquefaction and Appreciation of Illiquid Mortgage Securities
  
• Fund for Asset Value Extraction
  
• Fund for the Realization of Undervalued General Assets through Leverage
  
• Government Asset Trading Effort
  
• Fund for the Utilization and Trading of Undervalued Real Estate Securities
  
• Hope to Earn the Liquidity Premium on Undervalued Securities
  
• Organization for the Revaluation by the Government of Assets such as Securities and Mortgages.

OK, maybe not that last one. Probably wouldn’t go over very well with the “family values” crowd. Although...it depends on what you mean by “family values.” In order to have a family you need to....hmm....

Anyhow, those were my ideas for the original proposal. But in its current form, it’s a particularly sweet deal for the taxpayers: zero risk, and the potential for substantial profits. It’s as if an insurance company were make its policyholders pay back any losses that the company took on their claims. I must say: that feature rather soothes my concern that the program would overpay for the assets it purchases (although, of course, the good banks are potentially being asked to subsidize the bad ones, but I don’t really have a problem with that). Under the circumstances, I have a better name for the program:

• Program to Cheat Banks Out Of Money