When Treasury Secretary Geithner announced that the Treasury had projected the government would make a profit of over $19 billion on Tarp investments in banks, most of the media treated it as a big surprise, if they covered it at all.

But it should not have been a surprise. Short of another Great Depression, it was inevitable that the government would make a solid return on the bank capital investments. It is an indictment of the way our government communicated about the program, and even more so the way the media covered it, that this result is a surprise.

Readers might be saying to themselves, "Sure you can say that now, but who could have said that back then?" In fact, the ABA did. In testimony on Jan. 13 of last year before the House Financial Services Committee, I stated that the government would almost certainly make a profit off the Tarp investments and estimated the profit would be $30 billion to $40 billion. Our estimate may still be right, but any difference will likely be attributable to the fact that banks are repaying the Tarp money early, which means the total amount of dividends paid will be less than ABA projected.

How could we be so certain? We were not particularly prescient; it was not that complicated. The Capital Purchase Program, the program that governed all capital investments in banks except the second round of investments in Citigroup and Bank of America, was designed to put capital in banks that were well capitalized and profitable. Unless the world fell apart, of course the government would make money. All you had to do was total up the expected dividends, make a conservative estimate of the value of the warrants, and allow for a few failures and some missed dividend payments.

Then how could the public and many policymakers have concluded that the taxpayers were going to lose billions on the investment in banks? The reason is the failure of our government, particularly during the Bush administration, to clearly communicate the nature of the program and the failure of most of the media to even try to understand and communicate the facts. These failures are no small matter. They resulted in an exaggerated loss of confidence in our banks.

How bad the misconceptions and misreporting have been is exemplified in a recent story in one of our major newspapers. The headline screamed that taxpayers would lose billions on the "bank bailout" program. Yet the story itself focused on the billions likely to be lost on AIG, the auto companies and foreclosure prevention programs.

The communication failure of our government officials go back to the beginning of Tarp. The program was enacted in a panic. The panic was real, but was made worse by the rhetoric used to ensure the passage of Tarp.

When Libor went through the roof and a market panic ensued, then-Treasury Secretary Paulson and Fed Chairman Bernanke called the heads of the largest U.S. banks and securities firms to Washington and, as has now been shown, ordered them to take a capital injection.

Many believe that a few of those institutions may have needed capital support in the face of the panicked markets, but others clearly did not. They were well capitalized and, in fact, at least one was confidently planning on going to the private capital markets in the near term.

Almost immediately, regulators began calling other bankers, urging (some thought ordering) them to take capital from the newly created CPP. The pitch was: "You're a really strong, well-capitalized bank. This is not about you. We want you to take on extra capital so that we have a firewall of confidence in our financial system in case things deteriorate further and so you might be in a position to acquire troubled banks. We need you to do this to help us maintain confidence." I am not speculating here. Dozens of bankers independently told me this same story.

Less than 700 banks signed up, far less than the government hoped would join. Soon, participating banks, which under the CPP had to be well capitalized and profitable, were thrown by the media into the pot with failing institutions like AIG, Chrysler and General Motors. The ABA — in conversations with government officials, testimony, letters to Secretary Paulson and Chairman Bernanke, and numerous media appearances — urged that the CPP be clearly differentiated from the true bailouts of failing firms.

Even today, the return of the Tarp investments is routinely characterized as being all about wanting to pay bonuses. That may be one factor in some cases, but it is not the only factor and is not even applicable to the great majority of Tarp recipients. In reality, banks are paying back Tarp, generally at a great expense, to be out from under a government that has proven it will change the rules with the political winds and to avoid further damage to their reputations.

Certainly the banking industry has benefited in major ways from government actions to address the financial crisis, and some individual institutions may have been saved. Secretary Geithner deserves real credit for setting the record straight on the economics of the CPP.

However, the failure of our leaders to communicate the true nature of the CPP, and the media's mischaracterization of it, did severe and unnecessary damage to confidence in our nation's banking industry and to our economy.

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