The "TARP will pay for itself" Bullshit: TARP costs (losses) revised to $89 billion

[Political Heretic]

The Treasury revised the losses on TARP to $89 billion.

(For comparison)The March budget deficit was $65.4 billion.

The Wall Street Journal claims the TARP costs include Fannie Mae and Freddie Mac. That's simply not true, Fannie and Freddie received a separate, unlimited bail out. The last loss projection (for this separate unlimited bailout, independent from TARP) was $400 billion dollars. If one notices, Freddie Mac and Fannie Mae are woefully absent in any financial reform legislation as well.

http://www.economicpopulist.org/content/tarp-costs-revised-89-billion



Told ya so.

[anigbrowl]

1. Sigh...

Whereas in April of last year, the costs were estimated to be $250B. In other words, they have fallen by nearly 70% in the space of a year.

'The Wall Street Journal claims the TARP costs include Fannie Mae and Freddie Mac.'

Untrue. What the WSJ actually says:

According to the CBO, losses related to the investment portfolios of Fannie Mae and Freddie Mac are projected to total $370 billion through 2020, though the figure will fluctuate depending on the health of the housing market. The Treasury's $89 billion estimate for the total bailout cost doesn't incorporate CBO's projected losses at Fannie and Freddie because, for budgeting purposes, the Obama administration technically considers them private entities. Taxpayers are potentially on the hook for losses at Fannie and Freddie.

http://online.wsj.com/article/SB10001424052702304846504575177950029886696.html?mod=rss_com_mostcommentart

the blog you link to isn't very concerned with accuracy, it seems.


Fannie and Freddie are indeed no included in existing financial reform legislation, for the simple reason that they are under the direct control of the Federal government and are scheduled to be reformed separately, as discussed in Congress a few weeks ago:

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/23/AR2010032303993.html

[Junkdrawer]

2. And the TARP losses to AIG?

:shrug:

[anigbrowl]

3. ...are discussed in the same article, which apparently you didn't read

Included in the $89b number, and anticipated to be paid off over the next 2 years. The government has already made about 40% of its outlay on AIG back from the recent sale of subsidiary companies.

[Junkdrawer]

4. "AIG Racks Up More TARP Debt, While Rivals Pay It Back"

...

Taking TARP money stigmatized AIG, The Hartford and Lincoln National, which is probably why more insurers didn’t tap it. Accepting the funds also allowed the Treasury, and in particular its pay czar, Ken Feinberg, to play a role in running these companies that none of them much liked.

But AIG, at least, will have to get used to it for a while longer. AIG borrowed another $2.2 billion from the Treasury to prop up its property casualty business. The company needs to pay back more than $50 billion before it can shake off TARP’s shackles. That won’t happen anytime soon.

http://industry.bnet.com/financial-services/10007754/thehartford-aig-treasury-tarp-lincolnfinancia/

[anigbrowl]

5. Indeed, but as I said it will take time

Here is a more recent news report with additional detail on when and how much money is expected to be returned to the Fed and Treasury. I'd estimate that by this time next year AIG will owe the country $25b or less.

[Hippo_Tron]

6. A small price to pay to avoid a complete economic meltdown

That said, I am troubled by the fact that congress isn't getting serious about regulating the financial system so that this doesn't happen again.