Just because banks are repaying the TARP doesn't mean they are off the hook

I have read lately that the fact that US banks are repaying the TARP (the emergency facility set up during the crisis to rescue the banking system) means that all is now well. Taxpayers should be happy that they made a profit, as banks have repaid capital and interest. Well, things are not that simple. Rather, it's like saying: had I bet that Lehman would fail, I would be a millionaire. In this fancy world, everyone would be a millionaire by now.

The mistake comes from judging things knowing the outcome. Taxpayers were forced to enter a deal with banks under the threat of financial collapse, assuming unknown (and potentially huge) risk in exchange for an interest payment. The fact that the outcome was favourable to the taxpayer doesn't mean it was a good deal. Things could have ended very badly. You cannot say that it was obvious things would turn out for the best. Only people who are now millionaires following Lehman's bankruptcy are allowed to say that (and even so).

This is why Obama's proposal that banks should pay an insurance fee sounds fair.