The Troubled Asset Recovery Program (TARP), conceived during the last Bush administration, justifies its $340 billion federal bailout as a means of preventing a national economic catastrophe.

And the program has certainly worked quite well in rescuing the speculators who created the distressing mess in the first place. Yet even though financial institutions buoyed up by the American taxpayers have begun to recover and show profits, interest rates have continued to decline.

Consider this liberal alternative: a federally guaranteed interest rate of at least 3 percent on personal bank deposits! Such a policy would actually benefit a much wider community who managed their resources wisely in the first place.

At a rate of 3 percent, the amount of interest paid, for example, on savings accounts totaling $1 trillion would be $30 billion, less than one-tenth the amount awarded to mismanaged corporations and their executives. If the entire TARP $340 billion had been paid as interest to savers, it would be equivalent to the interest disbursed on deposits of more than $11 trillion, but with the added benefit of being distributed directly to a greater number of spenders, the ones who really make our nation’s economy work.

Could such a simple plan have enabled more people to afford more goods and services, and provide a broader, more democratic and effective economic stimulus than the TARP?

Richard Siege

Southern Pines