Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Brent Crude Oil Price Technical Update: Low Volatility Leads to High Volatility - 20th Feb 17
Trump’s Tax System Could Spark The Wave Of Self-Employment - 20th Feb 17
Here’s How to Stay Ahead of Machines and AI - 20th Feb 17
Warning Signs Of Instability In Russia - 20th Feb 17
Warning: This Energy Investment Could Wreak Havoc On Your Portfolio - 20th Feb 17
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

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

Interest-Rates / Credit Crisis Bailouts Apr 29, 2012 - 05:43 AM GMT

By: EconMatters

Interest-Rates

Best Financial Markets Analysis ArticleThe 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%.

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2012 Copyright EconMatters - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 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

Catching a Falling Financial Knife