Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Wall Street Bank Bailout Tally Shows Billions of Dollars of Stolen

Politics / Credit Crisis Bailouts Apr 07, 2010 - 08:19 AM GMT

By: Global_Research

Politics

Best Financial Markets Analysis ArticleMethodology: In calculating the bailout totals, CMD’s focus has been on direct and indirect support to financial institutions that had a role in causing the financial crisis. We tally programs across five federal agencies (Federal Reserve, Treasury, Federal Housing Administration, Federal Housing Finance Agency, and the FDIC) and include direct support, loans, and guarantees.


Included in our tally is the Troubled Asset Relief Program (TARP) of the U.S. Treasury, which we price at having spent $410 billion. Unlike other bailout tallies, we exclude non-Wall Street bailout programs, including economic stimulus funds, unemployment insurance, student loan aid, the auto bailout, "cash for clunkers" or other efforts to create jobs or assist the citizenry. Also, unlike other bailout tallies, we include the vast efforts at non-Treasury agencies (like the Federal Reserve) for programs to support private banks as well as support for the mortgage and mortgage-backed securities markets through federal housing institutions like Fannie Mae and Freddy Mac – which account for 91% ($4.2 trillion) of the disbursed funds.

1) $4.6 TRILLION IN TAXPAYER FUNDS HAVE BEEN DISBURSED

All together, $4.6 trillion of taxpayer funds have been disbursed in the form of direct loans to Wall Street companies and banks, purchases of toxic assets, and support for the mortgage and mortgage‐backed securities markets through federal housing agencies. This is an astonishing 32% of our GDP (2008) and 130% of the federal budget (FY 2009).

2) TARP vs. NON-­TARP FUNDING

Most accountings of the financial bailout focus on the Troubled Asset Relief Program (TARP), enacted by Congress with the Emergency Economic Stabilization Act of 2008. However, a complete analysis of the activities of all the agencies involved in the bailout, including the FDIC, Federal Reserve and the Treasury, reveals that TARP, which ended up disbursing about $410 billion, was less than a tenth of the total U.S. government effort to contain the financial crisis.

TARP funds only account for about 20% of the maximum commitments made through the bailout and less than 10% of the actual funds disbursed.

Table 1:

TARP vs. Non­TARP Bailout Funds (in millions)

 

Maximum At­Risk

Disbursed

Outstanding

Non­TARPTARP $2,830,400 $410,461 $224,839
  $11,036,790 $4,215,245 $1,765,455

 

TARP vs. Non­TARP Bailout (Disbursed)

9%

TARP Total

Non‐TARP

Total

91%

3)  THE FEDERAL RESERVE HAS PLAYED THE PRIMARY ROLE IN THE BAILOUT

The Federal Reserve has provided by far the bulk of the funding for the bailout in the form of loans — $3.8 trillion in total. Little information has been disclosed about what collateral taxpayers have received in return for many of these loans. Bloomberg News is suing the Federal Reserve to make this information public. On March 19, 2010, Bloomberg won its suit in the Second Circuit Court of Appeals, but it is not clear if this case will continue to be litigated to the Supreme Court.

Table 2:

U.S. Government Bailout Funds, by Agency (in millions)

 

Maximum At­Risk

Disbursed

Outstanding

FederalTreasuryReserve $2,075,200 $791,600 $591,751
FDIC $11,779,490 $3,833,378 $1,397,815
  $12,500 $728 $728

 
4)  FEDERAL SUPPORT FOR THE HOUSING MARKET IS ON THE RISE

A key component of the bailout has been the federal support for mortgages and mortgage-backed securities (MBS). While some may not consider this housing support part of a "Wall Street bailout,” Wall Street firms and Main Street banks are the primary beneficiaries of these funds which are preventing the collapse of the MBS market and boosting the price of the trillions of dollars worth of mortgages and mortgage-backed securities the banks themselves still hold.

Since their effective nationalization through conservatorship in September 2008, the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, have stepped into the gap caused by a steep drop-off in demand for mortgages, repurchasing massive amounts of mortgages from lenders and taking huge losses. The losses of the GSEs result from paying banks too much for the mortgages that they have purchased. In other words, their losses are the banks’ gain.

However, due to the persistent problems with falling home prices and rising foreclosures, demand for mortgage-backed securities that the GSEs bundle and sell has been weak, necessitating a massive purchase in GSE securities by both the Treasury and the Federal Reserve. The growing role of the Federal Housing Administration in guaranteeing mortgages is clearly having a detrimental effect on its balance sheet, which has as-yet-undetermined consequences for the federal budget should the agency need to be recapitalized. The FHA losses also help to subsidize the private banking system by effectively charging too little to guarantee private new mortgages issued by banks.

All together, the government has disbursed more than $1.5 trillion in non-TARP funds to directly support the mortgage and housing market since 2007.

Table 3:

Non­TARP Bailout: Support for Housing and Mortgage Markets (in millions)

Active/

 

 

Max At­

Current At­

 

 

Inactive Program Agency Risk Risk Disbursed Outstanding
Active GSE stock purchase Treasury unlimited unlimited $125,900 $125,900
  GSE direct obligation          
Active purchases FRBNY $200,000 $175,000 $169,011 $169,011
  GSE mortgage‐backed          
  securities purchase          
Active (Fed) FRBNY $1,250,000 $1,250,000 $1,027,452 $1,027,452
  GSE mortgage‐backed          
  securities purchase          
Active (Treas) Treasury $314,000 $190,351 $220,000 $190,351
Inactive GSE credit facility Treasury $25,000 $0 $0 $0
  Federal Housing          
Active Administration FHA $352,000 $352,000 $0 $0
Totals     $2,141,000 $1967351 $1542363 $1512714

5) THE BAILOUT IS FAR FROM OVER

All together, $4.6 trillion of taxpayer funds have been disbursed in our tally of the Wall Street Bailout. Of that, about $2 trillion remains outstanding. Many of these programs have “buy and hold” strategies with securities that have maturities of up to 30 years. The Federal Reserve in particular is likely to continue holding more than a trillion in these troubled assets for years to come with unknown consequences for taxpayers.

The Center for Media and Democracy

http://www.globalresearch.ca

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules