Colin Barr

Following the money in banking, economics, and Washington

'Thank God' for bailouts

September 20, 2010: 3:26 PM ET

Tired of all the mealy-mouthing over the bailouts? Charlie Munger's your man.

Munger, the billionaire value investor who is Warren Buffett's sounding board and vice chairman of Berkshire Hathaway (BRKA), told students at the University of Michigan this month that the Troubled Asset Relief Program and other handouts to bankers were "absolutely required to save your civilization."

Paulson: Bailout savior

Munger, 86 years old, also rejected the idea of bailing out people whose economic decision making was as bad as the banks', saying individuals must "suck it in and cope" – or society will collapse.

"Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens," Munger said on a video taken from a Sept. 14 discussion in Ann Arbor, Bloomberg reported. "You should thank God" the government saved the big banks and their investors, he said.

The remarks come as TARP winds down, with few supporters to show for its efforts. The $700 billion program helped to stop the run on the financial markets in the fall of 2008, but it and other bailout plans – notably the rescue of AIG (AIG) -- did so at great cost to Americans' sense of fairness.

The Congressional Oversight Panel that was seated to provide an accounting of the program's costs and benefits, said last week that while TARP "provided critical support to the financial markets at a time when market confidence was in free fall, the program has been far less effective in meeting its other statutory goals, such as supporting home values, retirement savings, and economic growth."

Of course, skeptics of the bailout might point out that the entire effort was far fetched to begin with. TARP hasn't succeeded in supporting home values, for instance, because home values were ridiculously inflated and will have to fall even more before buying a house will make clear economic sense.

In any case, what Munger seems to be saying is that Americans have voted as if they want prosperity at any cost, a fact that informed the response Henry Paulson (right, above) and Ben Bernanke cooked up. That hardly exonerates them as policymakers, but it's hardly fair to pretend otherwise.

(h/t Eddy Elfenbein)

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Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for since November 2007. Previously he was a writer and editor for, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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