The Real Numbers On TARP

We hear all about these $700 billion dollar bailouts for the banks. And to be sure, they're awful. But they are somewhat less awful than advertised.

The Congressional Budget Office has put out its latest calculation of the loss taxpayers will take on the TARP bailout.

CBO estimates that the subsidy cost of the transactions (broadly speaking, the difference between what the Treasury paid for the investments or lent to the businesses and the market value of those transactions, including repurchases of preferred stock) amounts to $159 billion.

The automobile bailouts look particularly grim. Of the $55 billion that went out the door, CBO expects $40 billion will never be returned.

Also, $50 billion of this goes to the foreclosure mitigation plan (although this needs some scrutiny, because the money does not appear to be getting to people who need it), and $35 billion for AIG (although a lot of that was a pass-through to the banks). That's $125 of the $159 billion. Just the straight payments to the banks are being recouped at a fairly high rate, although there's no way they could be considered "investments" - all of them will come in at a loss.

Considering the big banks largely broke the system - a system which is still broken, by all accounts - giving them ten cents doesn't please me. And the Treasury Department looks like they're offering a bad deal for taxpayers for the shares entitled under TARP. But this really is significantly less money than feared, and certainly not the budget-buster assumed. Relative to the stimulus, which provides a lot of money to real people and creates jobs, the TARP bailout is looking smaller.