42 Pages Posted: 14 Mar 2011 Last revised: 26 Mar 2011

Date Written: March 9, 2011

Abstract

The popular and scholarly consensus on TARP holds that it is a paradigmatic case of the administrative state run amok. This study of the Capital Purchase Program, however, shows that, despite the absence of specific statutory commands or any judicial review, the first and largest sub-program of TARP operated in accordance with the basic requirements of the rule of law and core values of administrative governance – that is, effective administration, protection of the legal rights of regulated entities, and facilitation of democratic control. This success was due to alternative mechanisms for holding administrators to account, specifically, the hierarchical bureaucratic structures established to run the program and the fact that the program involved voluntary transactions rather than coercive regulation.