As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Monday, August 31, 2009

Bailout Bonanza!

Looks like the United States has actually made money on the bailout thus far. But this reflects a very small sample. As you may know, the Bush Administration forced dozens of banks to take TARP money which may not have needed it, to disguise the true weak sheep in the system. Those banks which where in relatively good health are the ones returning the money to the Treasury. And this doesn't take into account all of the other special lending deals they've received from places like the Federal Reserve, which has enhanced their balance sheets and enabled them to repay the TARP money. Then there's the other two-ton elephant in the room.

The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

Some of those measures, like AIG and Fannie and Freddie, had nothing to do with TARP. But the CBO actually made projections on all of this back in April, and they foresaw major losses. The answer lies probably somewhere between small profit and catastrophic loss, so you shouldn't read a whole lot into either.

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