Has something like TARP worked before?

Indeed it has. In the 1980s, several economies were in dire straits in terms of indebtedness, including Mexico, Brazil, Argentina and the Philippines. The countries set up a program to buy back their own debt from distressed small banks at an 80% discount to par value. On 9% and higher interest rates, these purchases allowed the countries to save, annually, 45% to 60% of the money invested in these programs. Effectively, the countries paid down $5 billion worth of debt with only $1 billion of investment and recovered the expense in less than two years on interest savings alone.