Do you think letting the banks fail would have had zero disruptive impact on the economy? None whatsoever? What other programs can you name that garnered support from Nancy Pelosi and George W Bush, helped people millions of people, and had a negative cost to the government? And yet people think it’s horrible, in part because the public sphere has utterly failed to defend it.
It didn’t cost $700 billion either, in the end, it’s pretty close to break even. Yeah, they should have settled AIG’s credit default swaps for 60 cents on the dollar (or something like that), but it wasn’t a pointless $700 billion give-away to fat cat bankstas.
Update. I mean to add this proviso:
So when folks like Yglesias or Benen argue that the banking portion of the bailout cost us nothing or made us money they should probably be subtracting a large portion of whatever the AIG losses end up being from the amount of profit the US makes on the loans, warrants, etc.