Barack Obama's justice department let nearly all the bankers off the hook after the 2008 financial crisis. A largely democratic Federal Reserve accommodated with zero interest and quantitative easing. Losses were socialized in the form of zero-interest rates that penalized savers. Zero interest rate policies and quantitative easing led to massive wealth inequality and eventually the foundation of the inflation we're now experiencing.
Losses incurred by the banking system were socialized. Profits were privatized. Republicans run this same play via the tax system. But the effect is identical.
Bankers got rich. Wealthy people got wealthier. Working people got poorer.
The point I raised is that Democrats are equally complicit in socializing losses and privatizing profits. The mechanism may be different but the outcome is identical: poor people get poorer.
In 2008 and 2009, to remove moral hazard, big banks needed to be temporary nationalized, their shareholders and bondholders wiped out and some of their executives jailed. The loss would have been felt by the wealthiest. Instead, the Obama administration took the path of shoveling billions of dollars into the big banks. Poor people got inflation, the wealthy got richer.
So to answer the narrow question of privatization: in 2008 and 2009, by not nationalizing the banking system when it imploded, the Obama administration in effect privatized it as a hybrid quasi nationalized system. Banks were force fed billions and of taxpayer money. Executives didn't get fired. Guess who still got to collect outsized salaries? Guess who got screwed over? This was a privatization because the financial backstop to the banks changed from the market to the Federal government. Everyday workers got shafted.
The government made money on TARP. Those were not interest free loans, they were preferred shares on which the banks and other companies had to pay a 5% dividend. Also, these programs began in 2008, as you said. Obama was not president in 2008, though his transition team was involved late in that year. TARP had bipartisan support in Congress.
> In total, U.S. government economic bailouts related to the global financial crisis had federal outflows (expenditures, loans, and investments) of $633.6 billion and inflows (funds returned to the Treasury as interest, dividends, fees, or stock warrant repurchases) of $754.8 billion, for a net profit of $121 billion.
Post 2008, bank earnings were effectively subsidized by ZIRP+QE. Pre GFC, banks had to pay interest on deposits to savers who wanted a risk free return. Post GFC, that risk free return went to zero, leaving the banks to scoop up the margins between cost of funding (0%) and the return on lending.
The banks paid back TARP with money that would have accrued to the public pre-GFC. So yes, TARP resulted in a profit for the government, but the organization of the banking system post GFC was a net loss to the public at large - money that savers would have once earned was handed to banks. This government backstop socialized the losses accrued pre-GFC by distributing it across the public; banks were recapitalized at the expense of savers. Of course it wasn't distributed equally. Everyday workers and savers took enormous losses - just spread out over time as the purchasing power of their savings eroded against housing, healthcare and education.
Obama spent his first two years with a Democratic Congress on healthcare - when he should have nationalized, recapitalized and reformed the banking system in favor of workers. Why didn't he? Well, it should be no surprise that the banking industry is one of the largest political donors in any given election year:
