Where Did the TARP Money Go?

Discussion in 'Economics' started by piezoe, Apr 17, 2015.

  1. piezoe

    piezoe

    I thought many of you would be interested in a detailed accounting of TARP fund disbursements. All of this information is of course available on government websites, but ProPublica has done a beautiful job of putting it together in a readily digestible format. If you go to the link you will find it's possible to actualy search for TARP recipients in your own State.

    The internet is both a marvelous information and disinformation source. I've noticed a disturbing amount of disinformation in the economics forum recently. This bit of first rate professional reporting below may help combat that.

    A question that always crops up when TARP is discussed is cost of capital. In other words, what did it cost us tax payers to borrow that huge amount of money? What the real net cost of capital is, in this unusual case, will depend on how the Fed balance sheet is handled. When Treasury borrows, indirectly of course, from the Fed rather than the private sector, the cost of capital can be very near zero -- recall that all net Fed profit flows directly back to Treasury. In the case of TARP and the separate Fannie Freddie bailouts, almost all the money borrowed by the Treasury for these programs was loaned out at interest and secured by collateral, or used to purchase assets. Consequently when Treasury liabilities, including the near zero cost of capital, is balanced against the interest, dividends, and proceeds from sales of acquired assets received by the treasury, a net profit is expected. QE is, indeed, a powerful tool for rescuing an economy on the brink!

    Please go now to: (up to date as of April 6, 2015)

    https://projects.propublica.org/bailout/
     
    TGregg, Chuck Krug and loyek590 like this.
  2. Tsing Tao

    Tsing Tao

    Except that in the bailout of GM and AIG, the taxpayers lost money. Not to mention the whole idea of bailing out private companies with public dollars, the government choosing winners, and the overall socialization of losses (but privatization of winnings)...

    And for greatly exacerbating the inequality of wealth among social "classes", pushing corruption, (Federal investigators have launched more than 20 criminal fraud investigations related to the TARP financial bailout.[source]) etc...
     
  3. eurusdzn

    eurusdzn

    How was QE3 used. Never heard a good explanation of this. I can spend another hour in
    The internets and read the same ole thing.
     
  4. piezoe

    piezoe

    Not exactly. (vide infra)

    In January of this year the government sold its final stake in Ally Financial (formally GMAC). A profit of 3.06 Billion was realized from the GMAC transactions. Treasury will lose about 1.32 billion on the Chrysler bailout, which is also finished. On Chrysler financial services the profit was 22 million. Bailout of Chrysler Receivables returned a 49.7 million profit. And on GM itself it will lose 11.4 billion. The net on the auto company bailouts is a negative 9+ billion (a loss).

    A total of 67.8 billion was disbursed to AIG.
    On Dec. 11, 2012, the Treasury sold its last remaining portion of AIG stock, ultimately earning a profit of about $5.03 billion. The Federal Reserve ultimately realized a profit of about $17.7 billion from its role in AIG's bailout.

    In addition, while the bailout of AIG was in progress, the treasury, in april of 2009, cut 165 million from an additional AIG credit line of 30 billion that had been agreed on, and charged AIG a fee of 165 million to recoup bonuses paid to AIG executives.

    from ProPublica:
    "While the Treasury has paid out money to 948 recipients, only 780 of those received funds via investments meant to return money to taxpayers. The rest received subsidies through TARP’s housing programs – that money (so far totaling $15.1 billion) isn’t coming back.

    Of the 780 investments made by the Treasury, 560 have resulted in a profit. 121 of the investments resulted in a loss. So far, the profits amount to $48.1 billion, while the losses amount to $17.4 billion. 99 of the investments are still outstanding."

    You are correct re the auto company bailouts losing money but wrong re AIG and certainly going to be wrong regarding the program as a whole which will return a substantial profit.. You are so bone headed you refuse to pay any attention to the facts.. Consistency is good, but being consistently wrong is not.

    Please feel free to confirm these transactions at Treasury.gov

    I understand why you're the way you are. You have a very strong ideological bent toward libertarianism, and so do I, by the way. The difference between us is that you are so warped by your ideology that you have become completely inflexible and simply will not accept any reality that might suggest a weakness in your libertarian philosophy. Because the bailouts are anathema to every libertarian bone in your body, you are unable to accept the obvious realty that they succeeded magnificently, particularly when judged against the certainty of a financial system collapse had nothing been done.

    You might find this point of view educational: http://www.ft.com/intl/cms/s/0/3653e4d4-60fd-11e4-b935-00144feabdc0.html#axzz3XccXcoVV
     
    Last edited: Apr 17, 2015
    bullmarket79 likes this.
  5. piezoe

    piezoe

    Pretty much the same as the other QEs. They were open ended programs and didn't happen all at once. Loans made under TARP are still being paid down.
     
  6. TGregg

    TGregg

    Great thread, Piezoe. Thanks.
     
  7. Tsing Tao

    Tsing Tao

    Quite a change from your statement in the QE thread that said:

    See? You can learn new stuff too. So we agree that the auto bailouts gave the tax payers a loss. We can put that one to bed now.

    As I mentioned in a previous thread, this analysis is wrong. You didn't read my proof then, I guess, otherwise you'd not be spamming the same incorrect commentary over and over again. Here it is once more. Have a good read. Pay close attention to the following text in particular:

    Its December 11, 2012 sale of stock resulted, we are told, in the full recovery of the government’s commitment along with an approximately $22.7 billion combined return for the Treasury and the FRBNY, marking an incredible reversal of the original expectation of catastrophic losses. Sadly, the Treasury’s statements are highly misleading. In its accounting for the AIG bailout, the Treasury simply left out a number of salient facts when it announced that American taxpayers made a profit. Stated simply, we did not.

    The Treasury claims to have achieved a return of $5.0 billion, but neglects to mention that the Federal Reserve gifted them more than 500 million shares of AIG. Moreover, they simply ignored the unique and preferential tax treatment accorded to the company that is estimated to have inflated its share price by at least $5. Additionally, its estimates fail to compensate taxpayers for the true cost of capital or the risk assumed in its investments. After adjusting for the aforementioned factors, we find that the Treasury’s investment in AIG was actually very costly for taxpayers.


    You're quite good at dishing out advice, but lack the ability to actually follow that advice.


    I appreciate you going after me instead of disputing my responding points (now ignored in several threads), but it shows you don't have a strong grasp of the situation besides what you read on official government sites. As for you being a libertarian, I actually shot diet coke onto my keyboard through my nose in laughter. Now I have to clean that up, damn you.

    You're a government and Fed shill. It's clear by your cheerleading and silly statements with words like "magnificent" when describing the bailout's results, or "brilliance" when talking about Bernanke or Yellen. I wonder if you realize how ridiculous you sound? I doubt it.
     
    Last edited: Apr 20, 2015
  8. Tsing Tao

    Tsing Tao

    Wow, I never thought you'd be one that believed the bailouts were actually a good idea!
     
  9. piezoe

    piezoe

    In the following quote from Tsing Tao I have interspersed my replies in green type. Please expand the Tsing Tao quote if you care to see them. Thank you.

    P.S. Tsing, what did you think of the Financial Times commentary Re QE that I gave a link to? This is just a rhetorical question. I know what you thought of it, assuming you read it. :)
     
    Last edited: Apr 20, 2015
  10. Tsing Tao

    Tsing Tao

    In order to be misled, the person has to believe what you wrote in the first place. I did not, and was not.

    Second, I would be happy to comment on the FT article and give you my thoughts, if you respond to the AIG counter point I provided you (twice now). You also need to provide the link where it does not require a subscription to read. For some reason, that FT link asks me to login or subscribe.
     
    #10     Apr 20, 2015