Cost of government bailouts "shrinking to just a fraction of previous estimates"

[bigtree]

April 12, 2010

A (WSJ) piece reports that the projected cost of the government bailouts "is shrinking to just a fraction of previous estimates." Maybe the government is being overoptimistic but the Treasury Department now expects the final tab for its sundry bailouts to come in at around $89 billion. That's hardly chump change, but as the Journal notes, that would still be less as a percentage of GDP than the cost of the savings-and-loan rescue in the 1990s.

"Just a year ago, the Congressional Budget Office and Office of Management and Budget estimated that the overall bailout would cost more than $250 billion. Last month, though, Treasury Secretary Timothy Geithner said the rescues will amount to "less than 1%" of gross domestic product." Not that many critics are paying much attention. For months, Geithner has been a whipping boy for opponents of the White House's rescue plans.

The wildcard here is the health of a rebounding economy. If growth stalls and the housing market again declines, all bets are off. (That's a scenario where Republicans likely win big at the polls during the midterm elections.) But if the financial landscape continues to brighten and the costs of the bailout turn out to be manageable, the White House will earn credit for its management of the crisis. The bailouts fed populist rage and spurred the rise of the tea parties. Still, the Journal recounts that of the $245 billion that Uncle Sam invested in various U.S. banks, the Treasury has already received $169 billion back and now estimates making a profit of $8 billion. By year end, Citigroup and General Motors may also be off the government lifeline.

Even AIG, the mother of all financial basket cases, is looking less like an endless financial sinkhole. The New York Fed, which is about to get repaid $51 billion, also expects to pick up another $32 billion from AIG securities. A year ago, that scenario would have sounded like a pipe dream.


read: http://www.cbsnews.com/8301-504365_162-20002226-504365.html

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

[ixion]

1. balderdash

just a bit of cover for the 'crew'.

[NJmaverick]

4. link?

[NJmaverick]

5. link?

[ixion]

11. would love to provide one, but the US Treasury, the same folks who say things are great now

stopped publishing the M3 several years back, and despite "change" continue not to publish this. Hence their is no way of proving or disproving government issued talking points.

That is, we have NO WAY of knowing what the money supply is doing, because the government won't tell us.

[NJmaverick]

16. So you formed your opinion with out any facts

and worse you refuted facts with out any proof that they were wrong

[ixion]

18. And you blindly take the word from an agency known for obfuscation

and that is better how? :shrug:

[NJmaverick]

19. It's better because I deal in the world of facts and proof

[ixion]

21. ...

:rofl:

[NJmaverick]

25. I didn't think you would like the idea of dealing with facts and proof

:eyes:

[ixion]

30. You wouldn't know the difference between fact and spin

if it bit you on the a**.

This is why I laugh. :rofl:

[bigtree]

6. sounds like one of the opposition's rebuttals

. . . full up with indignation and scorn without any relevant facts at all to refute the administration's figures.

Maybe you have an argument that goes beyond the rhetoric . . .

[no limit]

2. That's great news! We'll need that money when we have to bail them out again in a few years

[NJmaverick]

3. I wish the Administration would push this story

much of the anger is over the misconception of how much money the government "gave" banks and Wall Street

[no limit]

7. You put gave in quotes as if we didn't give them anything.

Why?

They not only got bailed out but they are borrowing money from the FED at 0% interest rate. You give me a few billion in 0% interest and I'll make enough to live off for the rest of my life in a matter of months. Then I'll pay you back your original billion.

[NJmaverick]

8. Most of the money was loaned to institutions rather than given

[no limit]

9. Did you not read my post?

If you give me a billion dollars at 0% interest I could make millions of dollars within a few months. I would come out a millionaire, but just because I paid you back that original money you didn't give me anything?

Your definition of give is very odd.

[NJmaverick]

10. Making money on a loan does not mean the money was given

given means there is no expectation of the item being returned. You seem to be playing a bit of a game with the facts, to suit your needs.

[no limit]

12. A 0% interest loan. A loan that is insanely risky. That's a give out

They gave billions of dollars at 0% interest on an extremely high risk loan. I am not the one playing a game with the facts. Those are the facts. You pretending this wasn't a hand out doesn't change those facts.

Those banks then took that money they got at 0% interests and sold it back to consumers at rates as high as 30% and made record profits from it right after they collapsed our economy. That is ok with you?

[NJmaverick]

13. You talk about the risk when we are now after the fact and know that the risks

never materialized

[no limit]

28. I would love to tell a banker that working on my loan

don't worry mr. banker, the risks of this loan will never materialize. So give me free money. Thanks.

[beardown]

14. The US 'gave' the banks loans with no interest.

You are probably technically correct in that the US did not give the banks the money, but in one way or another they gave them access to free money that the banks then used to make more money. On top of that, a stated reason for the free money was so that banks could push more money into the economy and that didn't happen much. I don't think that you two are even talking about some of the massive giveaways that essentially gave banks funding or took over their bank investments so the banks could stay in business.

Call it whatever you like, but if I get an interest free loan of a billion dollars and a promise to buy some of my bad investments from me at market cost, somewhere in there someone 'gave' me something of great value.

[NJmaverick]

15. The correct term is LOANED not "gave"

[no limit]

17. lol. You simply can't understand very simple concepts.

So if I loan a US senator millions of dollars at 0% interest I don't give him anything? So by your logic that should be legal, right?

[NJmaverick]

20. You didn't give him a million dollars, which is the point you don't seem to understand

you gave him a few percentage points in interest payments, that is all

[no limit]

23. So that should be legal? We should be allowed to give our senators 0% loans?

[NJmaverick]

24. You are getting way off topic, we are talking about what the government "gave" the banks and Wall St

[no limit]

27. No, I'm not. You think giving someone billions of dollars in 0% interest isn't a gift

that means we can give senators millions of dollars in 0% loans and that would be perfectly legal according to your own logic. Tell me how Im wrong.

[Bluenorthwest]

22. Seems the cost is still higher for us, the lender, than for the banks

the borrowers, no matter how you slice it. Just $89 Billion! And the banks got huge interest free loans, scalped the citizens, and it just cost us only 89 Billion to do this for them, and to us.

[bigtree]

26. to conclude that

. . . you'd have to accept that the cost (to the economy, borrowers) of not loaning them the money would have been negligible.

[Cali_Democrat]

29. What about opportunity cost? I'm sure business folks are more than familiar with that term.

The cost of bailing out the banks as opposed to ordinary Americans?

We are in an employement crisis and there still seems to be no help for main street.