Tracking the bailout money

[Ivan Seeking]

The latest report indicates that banks and others have paid back something around 85 billion, with over 4 billion in profits for us taxpayers [one report said 6 billion in profits].

The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

http://www.nytimes.com/2009/08/31/business/economy/31taxpayer.html

Apparently there was something around 125 billion allocated that never went out. Also, CNN is who reported paybacks at 85 billion, but I didn't see that number reported elsewhere yet.

I thought it might be interesting to track all money loaned or invested, payments made back, and profits and losses from the bailout of the banks and investment companies, AIG et al, Freddie and Fannie, and the auto companies.

 

[Ivan Seeking]

Correction. The CNN reports cites the payback at about 80 billion. Total profits are listed as ~ 6 billion for interest and dividends. The latest dept of the Treasury report was cited as the source. I didn't see it online yet.

At a 15% return annually, I'll take some more of that action.

 

[Astronuc]

Are bailout investments paying off?
http://marketplace.publicradio.org/display/web/2009/08/31/pm-fed-q/

Kai Ryssdal: We came across some interesting numbers in the financial press today. First, that the Treasury Department's raked in a profit of $4 billion so far from the TARP. That's the bank bailout that's almost a year old now. Also that the Federal Reserve is $14 billion to the good on its bailout-related expenses. That sounded, honestly, high, so we called economist Douglas Elliott. He's a fellow at the Brookings Institution. Doug, good to have you with us.

Ryssdal: Seems to me what we need is a definition of terms here as we start figuring out how much money the government has gotten back. Are we actually making profits yet, or are we just recouping capital that we've laid out.

ELLIOTT: We're making profits on a few of the deals where it's closed. Some of the strongest banks have been in the position to pay us back. We know on those banks we've made money. What we don't know is whether we'll make or lose money on the rest of the banks.

Ryssdal: And just to get some sense of it, we've still got something like $100 billion, $130 billion of the TARP program outstanding to the banks. Big ones like Citigroup and Bank of America.
. . . .

The strong banks are making it. But what about the weak ones?

 

[Al68]

The latest report indicates that banks and others have paid back something around 85 billion, with over 4 billion in profits for us taxpayers [one report said 6 billion in profits].

Sure we did OK in those particular cases, but we can't judge a bailout by only the loans that are timely repaid at this point. Obviously they are far from being representative of the total.

I think I'll wait and see the rest of the picture before I advocate government becoming the nation's biggest loan shark.

 

[russ_watters]

Though I don't like the idea of such a bailout in theory, I was heartened by the possibility that it could turn a profit. I'm glad it has, in the funds that have returned anyway - we'll have to wait and see about the overall potential for profit.

I wouldn't assume that the remaining investments are more likely to lose money. It may actually be the other way around, as the ones who still have the money are likely some that took the biggest beating last year, providing perhaps the best possible upside when they recover.

 

[WhoWee]

I thought it might be interesting to track all money loaned or invested, payments made back, and profits and losses from the bailout of the banks and investment companies, AIG et al, Freddie and Fannie, and the auto companies.

This is a good idea - just don't forget to factor in the Barney Frank re-investment of paybacks plan.

 

[Ivan Seeking]

Sure we did OK in those particular cases, but we can't judge a bailout by only the loans that are timely repaid at this point. Obviously they are far from being representative of the total.

I think I'll wait and see the rest of the picture before I advocate government becoming the nation's biggest loan shark.

I'm not advocating anything, and I agree. I was just saying that for the loans repaid early, we did amazingly well.

The final tally may look quite different but we will see. So far, so good.

 

[Jasongreat]

That is nice we made a profit, so far, but what is that 6 billion going to do now? Will they spend it, or will they put it towards the deficit? If they spend it I would argue that we are no better off than if we wouldn't of made the profit. If it doesn't come back to the taxpayer or the deficit it is not profit(its just as if the bank paid more taxes) in my book.

 

[Ivan Seeking]

but what is that 6 billion going to do now

According to Slate

...Back into the program. If a bank wants to return its TARP money, it gets siphoned back—by wire, usually—into the original pool. In his testimony, Geithner said there's $110 billion left of the original $700 billion allocated by the TARP program. So once the expected $25 billion is returned, the remaining stash should reach $135 billion. (You can track the returned dollars at The Big Money's TARP-o-Meter.)

Funneling dollars back into the TARP, rather than putting them in the Treasury's general coffer, has two advantages. For one, it keeps the money on hand in case banks need another bailout. That's a plus since it would be politically difficult for Geithner to ask Congress for more bailout money. At the same time, taxpayers can see the TARP account creep back up toward its original level. If, say, 50 percent of the money eventually gets returned, the Treasury can brag that it spent only half...

http://www.slate.com/id/2216602/

 

[Jasongreat]

" For one, it keeps money on hand"
I wonder how long it is going to take until they only have a bunch of IOU's on hand? It sure didnt do much good to have social security money sitting around.

"in case the banks need another bailout"
So how long is this going to go on? Are banks ever going to have to learn how to run properly or are we going to keep proping up failing buisiness's?

Dont get me wrong it is great that atleast one government policy has'nt completely been a failure but I think it is a little early to be counting our chickens.

 

[WhoWee]

"in case the banks need another bailout"
So how long is this going to go on? Are banks ever going to have to learn how to run properly or are we going to keep proping up failing buisiness's?

Maybe you should be asking whether or not Barney Frank will be pushing for banks to make more risky loans anytime soon.

 

[Jasongreat]

Maybe you should be asking whether or not Barney Frank will be pushing for banks to make more risky loans anytime soon.

Do the banks have to do what barney franks says?(well they do now cause they took the money,but did they before?) I personally think that any CEO that takes buisiness advice from barney franks should be fired, anyways.

 

[WhoWee]

Do the banks have to do what barney franks says?(well they do now cause they took the money,but did they before?) I personally think that any CEO that takes buisiness advice from barney franks should be fired, anyways.

Here's a fun start to reading about Barney Frank's involvement in the banking mess.
http://massnews.com/index.php?optio...e-bank-meltdown&catid=1:latest-news&Itemid=27

"Whose responsibility was it to foresee any potential problems in the banking industry? Upon whose deskbarney frank does the $700 billion bucks stop?

Although it is certainly much more popular to point fingers at the CEOs of these GSE who were pocketing on the upwards of $200 million in compensation , one must remember, those individuals were doing exactly as they were commissioned by Congress to do…provide as many risky, sub-prime loans as they possibly could. And they were doing it too well.

The architect of the meltdown is Massachusetts own Barney Frank, ultra liberal democrat who set the stage for the meltdown, and as the Chairman of the House Financial Services Committee, even had the smarts to see the ship wreck he was creating, and publically discount the possibility that the unthinkable would happen. In his speech before Congress on the proposed regulation of Fannie Mae that would limit any type of financial crisis, Barney Frank said in 2003:

I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis… I do not think at this point there is a problem with a threat to the Treasury. … Some of the critics of Fannie Mae and Freddie Mac say that the problem is that the Federal Government is obligated to bail out people who might lose money in connection with them. I do not believe that we have any such obligation. ….The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn’t bail them out. Barney Frank obviously had been told many times that Fannie Mae and Freddie Mac were headed towards a precipice, and the fact that they increasingly investing in risky mortgages under the guise of providing “affordable housing” was being called into question by Republicans. Frank even floated the idea that the U.S. Treasury might be called upon to bailout these giants."

 

[Astronuc]

Bailout watchdog expects much to remain unrefunded!
http://news.yahoo.com/s/ap/20091021/ap_on_bi_ge/us_bailout_watchdog

WASHINGTON – The man who watches over the $700 billion in government money given to banks and other institutions to avert a financial collapse said Wednesday he thinks it's too early to say how much will be repaid to the taxpayers.

Just as the Obama administration prepares to announce a new TARP-like program for small community banks, Inspector General Neil Barofsky said he believes that "it's unrealistic to think we're going to get all of that money back."

The Treasury Department has spent more than $454 billion through TARP programs. Forty-seven recipients have paid back nearly $73 billion. That means more than $317 billion remains outstanding with the program set to expire Dec. 31.

. . . .

Somewhere I read that the US will lose most of its investment in GM.

TARP unlikely to bring taxpayer returns
http://marketplace.publicradio.org/display/web/2009/10/21/am-tarp-q/

Meanwhile - a similar situation in the UK

Mervyn King: Never in a field of financial endeavor has so much money been owed by so few to so many. And one might add, so far, with little real reform.

. . .

http://marketplace.publicradio.org/display/web/2009/10/21/am-king-q/

 

[Pattonias]

Using the traditional US government template, any money made from these payments will be seen as surplus and immediately be spent on crap. Our government doesn't know what to do with extra money, they only know how to spend it.

Won't it be years before we actually know whether or not this money is actually a profit or simply a made payment? You could take out a twenty year, two-hundred thousand dollar home loan and make the payments for 10 years before the loan itself ran out. I know that they are probably watched closer than that, but the payments shouldn't be the indication as to whether or not this is working.

On the other hand, I doubt taxes will be lowered if the government started making money in the business loan market.

 

[Astronuc]

Creditors Back CIT’s Bankruptcy
http://www.nytimes.com/2009/11/02/business/economy/02cit.html

. . . .
Even so, the bankruptcy filing means taxpayers will lose the $2.3 billion investment they made in CIT as part of the government’s sweeping financial rescue last fall, marking the first such loss of the bailout program.

Even though the government has been repaid with interest for its investments in companies like Goldman Sachs and Morgan Stanley, it will probably see more losses in companies like the American International Group and Chrysler.
. . . .

There's many more $billions in AIG and Chrysler than CIT.

The question is though - what would have been the alternative - simply let the entire international financial system collapse completely? That could have produced 20% or greater unemployment very quickly as markets froze.

 

[WhoWee]

We'll soon find out how much the rules have changed - this might just serve as the new template - (hint) watch the treatment of Goldman.

 

[mheslep]

Somewhere I read that the US will lose most of its investment in GM.

I happened to hear Gibbs asked this question today - would the taxpayers get any GM money back? A little? Some? Most? Gibb's was utterly evasive and non-responsive.

 

[mheslep]

Creditors Back CIT’s Bankruptcy
http://www.nytimes.com/2009/11/02/business/economy/02cit.html

There's many more $billions in AIG and Chrysler than CIT.

The question is though - what would have been the alternative - simply let the entire international financial system collapse completely? That could have produced 20% or greater unemployment very quickly as markets froze.

Chrysler and GM though were not part of the 'financial system'. They could have, should have been let go, but were not because of the union political interests I believe. Per the link you supplied the author credits the auto companies with most of the losses. The banks will mostly pay off w/ interest, the odd CIT won't change that.

 

[mheslep]

Chrysler and GM though were not part of the 'financial system'. They could have, should have been let go, but were not because of the union political interests I believe. Per the link you supplied the author credits the auto companies with most of the losses. The banks will mostly pay off w/ interest, the odd CIT won't change that.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_N.wjAooK1o&pos=5" all paying off the TARP bailout money, all at profit to the government. Looks like the only major TARP losses will be those to which TARP was never intended - GM, Chrysler.

 

[Astronuc]

It appears that the US taxpayers did will with the 9 largest banks.

http://dealbook.blogs.nytimes.com/2009/12/14/wells-fargo-to-repay-25-billion-to-us/

http://www.nytimes.com/2009/12/15/business/economy/15bank.html

There's a comment about Wells Fargo and it's exposure to consumer loans. They also apparently inherited about $122 billion of trouble mortgages through Wachovia. Citibank also apparently still has large exposure.

I wounder how much will be recovered from all the other banks?

Need an update of this - http://projects.nytimes.com/creditcrisis/recipients/table

 

[mheslep]

Need an update of this - http://projects.nytimes.com/creditcrisis/recipients/table

Note if one sorts that table by amount invested, Detroit comes out 2nd, $30+13+7 = $50B, behind only AIG (chart numbers are dated for AIG>$100B). On that score I look into my crystal ball and forecast the following:
o The Detroit TARP auto money will never be repaid.
o We never see Obama's pay czar address auto salaries, or bonuses, or cadillac automaker health plans the way he has with banks.
o We will never here Obama disparage Detroit as 'Fat Cats' as he did yesterday re Wall Street.
o The media/press will continue to largely ignore the tax money flushed down the Detroit drain.

The same goes for Freddie and Fannie bail outs, which could dwarf all of the above at http://online.wsj.com/article/SB123739512036672809.html"

Edit: similar WSJ tracker shows ~$70B went to Detroit, not $50B.http://online.wsj.com/public/resources/documents/st_TARPREPAYMENTS0906_20090609.html

 

[Ivan Seeking]

GM announces that the government bailout has been repaid, in full, with interest, five years ahead of schedule.
http://www.gm.com/

 

[mheslep]

GM announces that the government bailout has been repaid, in full, with interest, five years ahead of schedule.
http://www.gm.com/

That loan for ~$8B is a small piece of the total bailout. Together with Chrysler they still have some $60B of taxpayer money, most of which came from the Obama GM/Chrysler takeover. The amounts are totalled in the above NYT and WSJ links.

Edit: Even worse, http://www.foxnews.com/politics/2010/04/22/grassley-slams-gm-administration-loans-repaid-bailout-money/" the loan was repaid with other government money:

"The bottom line seems to be that the TARP loans were 'repaid' with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials,"

 

[Ivan Seeking]

That loan for ~$8B is a small piece of the total bailout. Together with Chrysler they still have some $60B of taxpayer money, most of which came from the Obama GM/Chrysler takeover. The amounts are totalled in the above NYT and WSJ links.

Edit: Even worse, http://www.foxnews.com/politics/2010/04/22/grassley-slams-gm-administration-loans-repaid-bailout-money/" the loan was repaid with other government money:

The same guy that said Obama wants to pull the plug on grandma. :zzz: Grassley has no credibility.

If they used tarp fund A to pay tarp fund B, clearly they won't need tarp fund A as was intended. Also, the 8 billion was certainly a big deal when we loaned the money.

 

[mheslep]

If they used tarp fund A to pay tarp fund B, clearly they won't need tarp fund A as was intended.

Good, they can give me back my share then.

Also, the 8 billion was certainly a big deal when we loaned the money.

True, but after being chased by another $60B it doesn't look so big any more.

 

[WhoWee]

GM announces that the government bailout has been repaid, in full, with interest, five years ahead of schedule.
http://www.gm.com/

Did they happen to mention where the funds came from - perhaps another Government loan?

This story is disingenuous at best. When they can pay their obligations from earnings, it will be an appropriate time to celebrate.

 

[WhoWee]

The same guy that said Obama wants to pull the plug on grandma. :zzz: Grassley has no credibility.

If they used tarp fund A to pay tarp fund B, clearly they won't need tarp fund A as was intended. Also, the 8 billion was certainly a big deal when we loaned the money.

If "Grassley has no credibility", where DID the money come from - and please support.

 

[mheslep]

GM's TV ad with CEO Whitacre spouting about the loan payback. The ad's a shame, as GM had the opportunity come clean about the $50B of taxpayer money GM still has its hands on and thereby reverse years of similar declarations of victory in the face disaster.

https://www.youtube.com/watch?v=SSNPFVLIWjI

 

[pallidin]

Let me see if I got this right:

1) Congress approved a bail-out fund.
2) We, as taxpayers, pay for that fund.
3) The business's in question eventually pays back to the government
4) The government does not give it back to the taxpayers.

What a great scam!

 

[mheslep]

Let me see if I got this right:

1) Congress approved a bail-out fund.
2) We, as taxpayers, pay for that fund.
3) The business's in question eventually pays back to the government

Pays back some