This week, the Treasury Department put out a colorful brochure, which is entitled "The Financial Crisis Five Years Later: Response, Reform, and Progress." The brochure looks a lot like the slick documents that the Bureau of Consumer Financial Protection produces. Despite its attractive look, much of the substance of the brochure, which celebrates crisis-era emergency programs and the Dodd-Frank Act, is disappointing.
A few examples illustrate the limits of the brochure's utility. Treasury asserts that the auto bailout was worth the $15 billion estimated cost, without exploring whether propping up the struggling companies to preserve jobs in the short term stifled longer run economic growth by preventing resources from going to companies that could use them most effectively. Treasury noted the nearly 7 million private and public loan mortgage modifications, but didn't explore how many of those mortgages had redefaulted. A July 2013 report by the Special Inspector General for the TARP program found that of the 1.2 million homeowners that had permanently modified loans under Treasury's program, approximately 306,500 had redefaulted. The brochure implies that investment banks, clearinghouses, and exchanges were only lightly regulated by the federal government before the crisis. Dodd-Frank intensified regulation of these entities, but all were heavily regulated before the crisis. Treasury reports positive returns from the AIG bailout, but one has to read the fine print to see that the results are on a cash basis and don't include financing or administrative costs. Treasury's pictures are prettier than the story they present.