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We Are The 99% event

USuncutMN supports #occupyWallStreet, #occupyDC, the XL Pipeline resistance Yes, We, the People, are going to put democracy in all its forms up front and center. Open mic, diversity, nonviolent tactics .. Social media, economic democracy, repeal Citizen's United, single-payer healthcare, State Bank, Operation Feed the Homeless, anti-racism, homophobia, sexISM, war budgetting, lack of transparency, et al. Once we identify who we are and what we've lost, We can move forward.

Sunday, December 18, 2011

CBO: TARP to cost US double initial estimates

Sun Dec 18, 2011 3:32PM GMT
The government's bailout of banks may cost U.S. taxpayers nearly two times more than originally estimated, according to the Congressional Budget Office (CBO).

The Troubled Asset Released Program, better known as TARP, will cost the federal government $34 billion, the CBO reported on its director's blog. That's $15 billion higher than the agency's previous estimate in March. The increase in the estimate is mostly due to a drop in the market value of the government's investments in American International Group and General Motors.

In addition to the TARP loan, the Federal Reserve provided financial institutions with loans totaling more than $1 trillion in December 2008, at the height of the credit crisis, according to Bloomberg.

Federal officials engineered TARP in October 2008, arguing that giving banks billions of dollars would help them withstand the credit crunch and stymie financial disaster. Critics allege that the money, which was supposed to spur lending to American businesses, never made it to Main Street. More recently, the contrast between the government bailouts bankers received and ordinary Americans' lingering jobs and housing woes has become a rallying cry for Occupy Wall Street.

In fact, many of the banks went back to making the same high-risk bets that got them into trouble in the first place, according to a September study from the University of Michigan. Banks treated the money and the limited guidelines that came with it as an implicit reassurance that the government would help them in the event of future disaster.

Though Treasury Secretary Timothy Geithner told a watchdog panel in June 2010 that the banks had repaid 75 percent of the bailout money they received, there's still billions outstanding. Financial institutions owe the government $18 billion, while AIG still needs to repay $50 billion, according to a CBO infografic.

While the CBO boosted its estimate, it's guess is still lower than that of other agencies. The Office Of Management and Budget estimates that the bailout will cost the federal government $53 billion, according to the CBO blog. Huffington Post

Beyond the $700 billion bailout known as TARP, which has been used to prop up American banks and car companies, the U.S. government has created an array of other programs to provide support to the struggling financial system. Through April 30, 2011, the government has made commitments of about $12.2 trillion and spent $2.5 trillion - but also has collected more than $10 billion in dividends and fees. NY Times

The first-ever Congressional audit of the U.S. Federal Reserve reveals that the central bank, between 2007 and 2010, gave $16 trillion in loans at zero percent to corporations and national banks throughout the world. The loans have not been paid back. United Liberty

While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger. Bloomberg

The Fed didn't tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn't mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. Bloomberg

U.S. banks reaped an estimated $13 billion of income by taking advantage of the Fed's below-market rates. Bloomberg

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