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
FACTS & FIGURES
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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