Wall Street Bailout comparison
… While it will be many years yet before we can put a hard number on the amount of taxpayer dollars actually lost in the bailout, the Center for Media and Democracy’s latest assessment of dollars disbursed in the bailout graphically illustrates the extraordinary lengths to which the federal government went to bailout the financial sector.
The silence from deficit hawks is deafening on this point, even on how to have the money returned eventually…except, it appears, for Social Security and unemployment insurance. Are you really going to put up with this from either party? Looks to be yes, of course! (update: sources of numbers found at Sourcewatch)
Where are those hawks when you really need them? At the bank!
where do they get that number? sounds like BS to me.
Go to sourcewatch here http://www.sourcewatch.org/index.php?title=Total_Wall_Street_Bailout_Cost
Wallace,
Just follow the links:
http://www.prwatch.org/node/8987 CMD original article.
http://www.sourcewatch.org/index.php?title=Total_Wall_Street_Bailout_Cost Link to SourceWatch, the compiler of the data.
Why the sense of disbelief? The truth is always stranger than fiction. When your elected representatives say that they are looking out for the “little” people they mean the very little group of people that own everything and, therefore, deserve their unbridled support and protection. It’s the lesser people, as noted by one Alan Simpson, that don’t desedrve governement’s support and protection. Lesser as in lesser income and lesser assets. I’d add lesser influence in spite of their bigger proportion of the population.
I thought that Wall Street had paid or was paying most of the money back. Freddie and Fannie are not on Wall street. Neither is GM or Chrysler. AIG may have an office on Wall Street but its an insurance company and not an investment bank.
So the bottom line is that even though the TARP program involved a lot of money the net cost imposed by banks and investment banks was rather small.
Ben is correct. “Banks Pay Back 75% of TARP”
http://www.zacks.com/stock/news/36037/Banks+Pay+Back+75%25+of+TARP
Sorry Ben. TARP is half ‘paid off’. However, it was not a simple loan at % rate. Rate of return is dismal for the taxpayer for the risk determined at the time.
Also, paying off this soon actually may weaken a company’s foundation of capital reserves and such, perhaps in the name of allowinwing bigger bonuses this year and next for company officers andd such. TARP is a small amount compared to guarantees and loans made in other programs and agencies. How much was TARP? And compare that to the other figures.
In 2008 Fannie and Freddie took over bundles of loans of “unknown” quality, some of which is to be bought back by the banks who bought the loans in the first place asa way of keeping these banks solvent and/or failing. These same banks are resisting the return of the loans as agreed…you tell me if you want to pay for these loans through Freddie and Fannie, who did the banks a favor of helping them stay in business.
Hi sammy. As if TARP is the be all and end all. Better reporting is needed.
Rdan,
The graphic is almost unreadable in the latest Firefox (Windows XP), it’s buried under your sidebar & a flash ad.
At RDAN’s link, you can see Fanny and Freddy at about 10% of the total. GM and Chrysler are not in this accounting.
The amount disbursed, but not paid back is $2.02 trillion.
This is still almost 3x the Stimulus package.
Cheers!
JzB
Looking through that it does seem that its the GSE’s that are the major outstanding cost. Then, private sector at least, AIG. At a fraction of the GSE cost.
And I’d say it’s very strange indeed to have new capital for the IMF in there.
i keep hearing that the GSEs took over bundles of loans of unknown quality, but i haven’t seen anything substantive that suggests this. i have read through their 10Qs and can’t find anything. can you point me to anything here?
yeah it’s odd what they chose to include.
also note that a lot of the GSE money is double-counted. (the treasury is backing up the Fed’s investment here.)
From secretary Geithner,
http://www.housingwire.com/2010/06/23/geithner-credits-signs-of-housing-market-stabilization-to-tarp
Not only has TARP housed many of the programs Geithner said are responsible for improved financial stability, but the cost of TARP itself is decreasing. He noted that in August 2009, TARP was projected to increase Federal deficits by $341b. That number has since been reduced to $105bn.
Financial firms that received TARP funds are also helping the Treasury recover bailout money. The volume of funds repaid into TARP from financial firms that received capital boosts now exceeds the volume of funds outstanding, the Treasury said earlier this month.
“We are well on the way to winding down TARP,” Geithner said.
It’s also worth pointing out the 1+ trillion MBS purchased by the fed have appreciated in price since they were bought. The purchases were limited to fixed rate mortgages backed by FNMA FHLMC and GNMA. See http://www.newyorkfed.org/markets/mbs_faq.html These are mostly newly originated loans originated after home price declines and tightened underwriting standards so it seems disingenuous to claim a maximum at risk of $1.25T
The smart people told us if we didn’t do TARP, your precsious entitlements would never exist, and we would live in caves.
We agreed to it, because we care about you Rdan, Oh……..and for the wimmens & childrins.
Fannie and Freddie outstanding is about $500 bn of the $2 tn. There’s also the quantitative easing of “mortgage-backed securities backed by mortgages guaranteed by the GSEs in order to keep the housing mortgage market functioning” which is $1.1 tn Combined this is 80% of outstanding and with AIG outstanding another $139 bn, or 7%.
rdan,
For the most part, “Wall Street” has paid off TARP. There are a few regional banks and lots of local banks that still have TARP Preferred outstanding, but none that would be considered Wall Street firms. As far as “early payoff”, all of the Wall Street-related firms have capital ratios that are way above normal, and that’s on top of reserves, which are also high (partially because of pro-cyclicality of reserving) and are essentially capital, since they’re there to absorb losses/write-downs.
Regarding the cost of TARP – it was used to purchase assets – which makes comparing it to other programs a tad different, especially now that with respect to Wall Street, they’ve gotten most of their money back. Recall that the original bailout of AIG was prior to TARP and the gov’t renegotiated the arrangement to pull them into the TARP umbrellla well after TARP had been approved.
Do you have a citation for the Fannie/Freddie repo agreement?
http://www.nakedcapitalism.com/2010/06/geithner-yet-again-misrepresents-tarp-performance.html
Marshall Auerback and Yves Smith have some thoughts on the wonderfulness of TARP monies.
I did have a citation but lost it. But it is important, so will look for it.
I’ve read Yves Smith (and Elizabeth Warren’s) take on this. And yes, if the USG were a profit-maximizing institution, the rate of return they demanded from the financial system at the time of TARP was clearly too low relative to a private investor. Except, smiliar to, but on a much larger scale than, the Buffet investment in GS in September of 2008, the very act of the USG making the investment immediately lowered the risk to the system. Secondarily, many of the firms neither wanted, nor needed the TARP funds but accepted “for the good of the country” and after a little strong-arming by Paulson and Geithner, so as not to immediately identify the weak players (Citi) and cause a bank run.
As an example, the feds guaranteed money market funds after the Reserve Fund “broke the buck”. There was value to that insurance, as noted by Ms. Smith and Ms. Warren, even if there was no money transferred. But the notion of announcing such insurance wasn’t to generate profits and/or the rational economic value for the USG.
Two things….I have to wait to the weekend to get more info on the objections to the inclusion and nature of programs and a link to the Fannie/Freddie issue of buy backs, and have asked the Center to defend their inclusions by forwarding some of the comments from here, since it is their take on the matter.