This page has been archived and commenting is disabled.

Myth Buster: TARP Bailout May Realize A Positive Return for Taxpayers?

EconMatters's picture





 

By EconMatters

 

The Troubled Asset Relief Program (TARP) is a program initiated by the US government, funded by taxpayers, in October 2008 to bail out the banking and housing sector after the 2008 financial crisis. Due to the program's complexity and "repayment" schemes, there has been different estimates of what TARP would ultimately cost.

 

We looked at the various TARP estimates in August, 2011 trying to shed some light on two very fundamental questions -- (1) Where has Uncle Sams' bailout money gone (2) Has the money been paid back yet.  At that time, we found some published non-government sources of the "amount outstanding" on TARP ranging from $239 billion tracked by Pro Publica to NYT's $480 billion (CNNMoney data came to $357 billion).  And there's also one jaw-dropping outlier--$1.5 trillion--estimated by the Center for Media and Democracy (CMD)

 

Even after taking into account of government sources such as Office of Management and Budget (OMB), the Congressional Budget Office (CBO), the U.S. Treasury Dept. is probably the only one repeatedly preaching the "profitability" of TARP. After proclaiming that "Repayments to Taxpayers Surpass Tarp Funds Outstanding." in June 2010, Treasury came out with this update earlier this month:

"Overall, the government is now expected to at least break even on its financial stability programs and may realize a positive return. Treasury’s TARP investments and overall stake in AIG, purchase of mortgage-backed securities, and Money Market Fund guarantee program are each currently expected to realize an overall positive return for taxpayers."

A week later, along came a congressional report by SIGTARP (The Office of the Special Inspector General for the TARP) pouring ice water on the seemingly overly optimistic Treasury:

"It is a widely held misconception that TARP will make a profit...... As of March 31, 2012, $470.1 billion is obligated to TARP programs.6 Of that amount, $414.6 billion had been spent and $50.2 billion remained obligated and available to be spent.  Taxpayers are owed $118.5 billion as of March 31, 2012

 

The table below from SIGTARP report lists the most recent TARP program estimates from three agencies.

 

 

The update from Pro Publica, which tracks both the broader $700 billion TARP bill and the separate bailout of Fannie Mae and Freddie Mac, showed $225 billion is the net still outstanding as of Apr. 18, 2012.  The tally from NYT stile as of April 28 came to $329.3 billion of fund not returned.  CNNMoney data suggests $356.2 billion "invested" within TARP, and $118.5 billion paid back, leaving 237.7 billion still outstanding.

 

Most of the outstanding TARP money is in the form of equity ownership in 437 institutions as of March 31, 2012. Treasury (and therefore the taxpayer) remains a shareholder in companies that have not repaid the Government.  According to SIGTARP's report, the difference in the TARP cost estimates from the three agencies are mainly in the assumptions regarding the value for AIG, GM, Ally, etc. stocks, future funds spent/received, and inclusion/exclusion of certain write-offs.  So essentially, it is difficult to come up with a good estimate as there's not a clear guideline for "assumptions."    

 

Nevertheless, don't think the buck stops here--SIGTARP report indicated $50.2 billion of TARP funds remain available as of March 31, 2012 to be drawn down by TARP recipients under three of TARP’s 13 announced programs mainly supporting banking, housing and auto sectors.  That means the $118.5 billion TARP loss concluded by SIGTARP could get even worse as more fund is still to be disbursed.

 

So it is fair to say regardless of the assumptions, it'd be hard pressed for TARP to break even let along turning a profit.  If we count the other programs such as the Fed's $1.2 trillion secret loan to Wall Street, the likelihood is quite small that U.S. taxpayers would ever come out of this hole dug so deep by the banking crisis and the subsequent secret and not-so-secret bailouts.  Sadly, it looks like the 99% will likely have more than just one lost decade in the course of bailing out the 1%.

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 04/29/2012 - 11:42 | Link to Comment bugs_
bugs_'s picture

How much gasoline could the TARP have bought when the checks were handed out?

How much gasoline could the repayed TARP have bought when repayments happened?

The average taxpayer can calculate their profit from those two numbers.

Sun, 04/29/2012 - 13:56 | Link to Comment mt paul
mt paul's picture

lack of profit...

Sun, 04/29/2012 - 11:05 | Link to Comment q99x2
q99x2's picture

So does that mean we get fewer drones or more drones?

Sun, 04/29/2012 - 10:37 | Link to Comment lunaticfringe
lunaticfringe's picture

I giggle when I see the commenters distracted so easily. Oh yea, we were talking about TARP weren't we?

One historical fact...above...The French Nobility or 1% right before the French Revolution and the rise of the guillotine had a pretty good run; until they lost their heads.

The last appropriate and meaningful comment with respect to the subject at hand. I'd love to see history repeat itself.

Sun, 04/29/2012 - 10:35 | Link to Comment Cheyenne
Cheyenne's picture

"the U.S. Treasury Dept. is probably the only one repeatedly preaching the 'profitability' of TARP."

Actually, it's only the Treasury's P.R. department that preaches TARP profitability, and only occasionally at that. Treasury's bean-counting department exposes TARP as a loser every day of its foul existence:

http://www.treasury.gov/initiatives/financial-stability/briefing-room/re...

(showing as of Friday, 4/26, $415 B disbursements vs. $338 B repayments, for a $77 B loss).

See also http://dailybail.com/home/corporate-media-fails-again-ap-fact-check-repe... and http://www.nakedcapitalism.com/2012/04/george-washington-tarp-overseer-d...

What's curious is why, nearly four years after the fact, Treasury myth-spinners and MSM minions are still trying so hard to convince everyone that TARP was a success.

Sun, 04/29/2012 - 10:16 | Link to Comment Shibumi2
Shibumi2's picture

Rand's novel is Santa Claus and the tooth fairy for groun ups. Something larger than life to make one feel good and noble, but fundementally untrue.

 

Stuff and nonsense. As bogus as the GREATEST GENERATION concept

Sun, 04/29/2012 - 18:59 | Link to Comment NewWorldOrange
NewWorldOrange's picture

"Rand's novel is Santa Claus and the tooth fairy for groun ups. Something larger than life to make one feel good and noble, but fundementally untrue."

That's absurd. Santa Claus and the tooth fairy for adults is called organized religion, and thing Ayn Rand went to great lengths to refute. Atlas Shrugged is about entrepreneurs, creators, and innovators who don't rely on government, getting so sick of government meddling, onerous taxation, and stifling regulation who finally "shrug" and refuse produce and pay taxes to a State that has turned Orwellian and is engaging in a massive wealth redistribution scheme.

Sound familiar? Yeah, that's the stuff of "fairy tales." I'll tell you what a fairy tale is - bureacrats, in Atlas Shrugged or reality, who think they can help an economy by seizing private wealth and oppressing entrepreneurship, and redistributing it to their cronies and those who vote for them.

Sun, 04/29/2012 - 10:12 | Link to Comment dizzyfingers
dizzyfingers's picture

Then let's stop paying for an "asset" that we didn't want, don't need, and is sucking us dry. End the Fed and all cartel banking in the US.

Sun, 04/29/2012 - 07:50 | Link to Comment BeetleBailey
BeetleBailey's picture

Yeah...I'll believe this when I see it. Fancy dancing type.

Sun, 04/29/2012 - 04:40 | Link to Comment ebworthen
ebworthen's picture

The French Nobility or 1% right before the French Revolution and the rise of the guillotine had a pretty good run; until they lost their heads.

Sun, 04/29/2012 - 15:49 | Link to Comment optimator
optimator's picture

Known as, "Going to hell in a hand basket".

Sun, 04/29/2012 - 01:18 | Link to Comment LetThemEatRand
LetThemEatRand's picture

The Fed is a group of private banks.

One of the most revered members of the Fed for some two decades was in the inner-circle with Ayn Rand and publicly embraced her ideals.   He literally hung out with her.  

This is what we get when Randaids take control. Suck it, self-interested Rand worshipers.  If you distance yourself from Greenspan, you reject Rand.  Rand loved Greenspan and spent a lot of time bringing him around to her completely vacuous and selfish philisophy.  Greenspan embraced it before taking charge of the Fed.  

Who needs the Somalia reference when we have America.

Sun, 04/29/2012 - 18:33 | Link to Comment NewWorldOrange
NewWorldOrange's picture

If you had ever even read any Ayn Rand (you've admitted many times you have not but have only read misconstruction of her writings by certains certain socialist authors seeking to discredit her), you might know that Greenspan's Keynesian policies were and abrupt refutatation of Rand's ideals. This has been pointed out by countless observers and even by Greenspan himself.

Sun, 04/29/2012 - 07:21 | Link to Comment Setarcos
Setarcos's picture

Spot on ... and more than a tad interesting that Ron Paul is another disciple of a crazy woman who never did a days work - let alone ran a business - but who invented John Galt as an entirely bizarre 'hero' in her novel "Atlas Shrugged".

The son of a motor mechanic, Galt began achieving impossibles by the age of twelve, see  http://en.wikipedia.org/wiki/John_Galt  for a summary.

It's all completely bizarre, but Ron Paul even named his son Rand in honour of this crazy woman.  So it is not really surprizing that he and Greenspan have Ayn Rand in common, along with Margaret Thatcher (herself crazy) and even Ben Bernanke, a protegy of Greenspan.

I mean that, in the fictional bizarre 'world' these folks occupy: it should not be surprizing to find strange bed-fellows.  Rand, herself, got her 'academic' start because the collectivist Soviet Union enabled women to go to university, so she ended up condemning the very system that allowed her that freedom (see  http://en.wikipedia.org/wiki/Ayn_Rand).

I am very far from praising the Stalinist Soviet Union, but the facts of her life point towards a very screwed-up person who never lived a ;life of "rugged individualism" ... she was always a parasite.

Sun, 04/29/2012 - 18:42 | Link to Comment NewWorldOrange
NewWorldOrange's picture

"I am very far from praising the Stalinist Soviet Union, but the facts of her life point towards a very screwed-up person who never lived a ;life of "rugged individualism" ... she was always a parasite"

What do you even know about the facts of her life besides what some leftist with an agenda alleged and cherry picked?

She finagled her way out of the the Soviet Union at the age of 22, by herself, with just the clothes on her back when she arrived at Ellis Island. She worked her entire life, self-employed, mostly as a writer. She never lived off of the government.

She came to America as a teenager seeking to escape communism and made it on her on efforts from her own hard work and gumption.

"the collectivist Soviet Union enabled women to go to university"

If she wanted to go to a university, she really had no choice at the time. And she could have paid for it if she had had the choice at all. Ayn Rand was writing and even publishing before she ever even went to college there and the vast majority of her education was self-education. She was appalled by the Soviet propagandization of the college curriculum and that is in large part what compelled her to get the hell out of there at age 22.

Sun, 04/29/2012 - 14:14 | Link to Comment seventree
seventree's picture

"Ron Paul even named his son Rand in honour of this crazy woman"

I'm no Ayn Rand worshipper, but still this is not true. His real first name is Randal; Rand is a nickname.

Sun, 04/29/2012 - 19:02 | Link to Comment NewWorldOrange
NewWorldOrange's picture

Certain leftist trolls here have no interest in the truth and say what they want in order to mischaracterize things they hate or misunderstand. Letthemeatrand has admitted he's never even READ anything by Ayn Rand. He's been here for almost a year posting almost daily for no other purpose but to discredit an author he's admitted he's never even read. It's equivalent to someone going to, say, some blog about Christianity for Christians just to hate on Christ and The Bible just to try to piss people off (downright sociopathic). Just days ago Letthemeatrand even made it really clear he is not even interested in discussing/debating issues around Rand and her writings. He just wants to spout off and has no interest itn even trying to back up his pronouncements.

Sun, 04/29/2012 - 01:35 | Link to Comment Terrorist
Terrorist's picture

Take your thread hijacking anti-Randian crap somewhere else.
No self respecting Randian believes in fiat money or fixing interest rates as a central planning tool.
You are just trolling to confuse newby sponges by trying to complicate what is simple.
Greenspan was an "armchair intellectual", he was not grounded in philosophy. He was not a man of principle. He was a pompous fool.
He leached onto a "in" movement to try and be somebody.
He was not a thinker he was a jibberish spewer just like you.

Now, do you have anything to say about how our Treasury dept tells boldface lies?

Sun, 04/29/2012 - 09:36 | Link to Comment Hey Assholes
Hey Assholes's picture

Rand is dead. Her philosophy stands on its own merits/demerits.

I agree with Terrorist - lets focus on how we the living are being screwed and lied to by "our" government.

 

Sun, 04/29/2012 - 05:07 | Link to Comment falak pema
falak pema's picture

sorry, greenspan was the power player who built the Reaganomics strategy; ZIRP and Debt funding of 1% wealth. Your historical analysis is totally wrong. Its Ayn Rand who was the arm chair philosopher, and Greenspan the true artficier of the most pernicious capitalistic construct the world has ever seen!

Don't confuse historical fact with ideology of a second rate economics and philosophical writer, who was warped by her adolescent experience under a totalitarian, so called revolutionary, but totally anti-revolution regime as it was Czarist in reality; traumatic experience admitedly. 'Atlas Shrugged' is just romantic hogwash at best. Why don't we all play "quidditch" instead! 

Sun, 04/29/2012 - 10:33 | Link to Comment Kayman
Kayman's picture

Sorry Serpent Girl

Anyone who can't connect so-called "irrational exhuberance" with self-spawned ZIRP is an idiot; your bleatings notwithstanding.

Greenspan was a puppet of the first order. Always ready to obfiscate the truth while supporting his masters.

Sun, 04/29/2012 - 10:50 | Link to Comment falak pema
falak pema's picture

go back to the caymans and stop playing at being caveman...you don't carry much weight with your rattle, as you don't bite like the snake. Go see True Grit to get a sense of that bite. 

Do NOT follow this link or you will be banned from the site!