Importantly, the legislation that created the TARP does provide sufficient flexibility to allow for different approaches to solving the problem – subject, of course, to the close oversight that will ensure that the program's funds are used in ways that are in the interest of taxpayers. These are momentous steps, but they are being taken to address a problem of historic dimensions.
In one respect, however, we are fortunate. We have learned from historical experience with severe financial crises that if government intervention comes only at a point at which many or most financial institutions are insolvent or nearly so, the costs of restoring the system are greatly increased. This is not the situation we face today.