Senate Democrats

ICYMI: TARP Made $35B For Taxpayers

Key Point: “The government’s heavily criticized $700 billion financial rescue program has earned nearly $35 billion in income over the past two years, according to data obtained by The Associated Press.”

**It’s not just today’s news– see below for more examples of investments that not only avoided a second Great Depression, but are now paying dividends for taxpayers.**

Treasury: Financial bailout income at $35 billion

(AP) – 9 hours ago

http://www.google.com/hostednews/ap/article/ALeqM5hhqh7owSR2s8eJrSZ1N_1LDKXRBA?docId=88d0da622dce44939e13c24125d77357

WASHINGTON (AP) — The government’s heavily criticized $700 billion financial rescue program has earned nearly $35 billion in income over the past two years, according to data obtained by The Associated Press.

The data showed that income from the Troubled Asset Relief Program rose nearly 17 percent through November, compared to where it stood in October. The income was boosted by the government’s ongoing sales of Citigroup stock.

The $35 billion estimate will be included in the monthly report on the bailout that is due to be released later Friday. The AP obtained the data in advance.

The new total is up from the nearly $30 billion in income shown in the previous report covering the program’s finances through October.

Much of the added income came from the government’s sale of Citigroup common stock. The Treasury Department sold off the last of its stake in the giant banking company Tuesday, ending up with a profit of $12 billion on the government’s investment of $45 billion.

Smaller amounts came from dividend payments from other banks that received support from the bailout fund, and also from dividends from the support provided to the former financing arm of General Motors.

While income from the bailout has risen, the estimates of its overall final costs have been dropping. Last month, the Congressional Budget Office slashed its estimate of the projected losses from the bailout program to $25 billion, down from an August projection of $66 billion and a March forecast that the program would cost the government $109 billion in losses.

The CBO credited TARP’s brighter prospects to continued repurchases of preferred stock by banks that received the bailout funds, a lower estimated cost for assistance to insurance giant American International Group and automakers Chrysler and GM.

TARP, which was developed by the previous Bush administration and passed by Congress at the height of the financial crisis in October 2008, became widely unpopular with the public.

Republicans used voter unhappiness with the bailout and soaring federal budget deficits to pick up six Senate seats in the November elections and take control of the House.

FACT CHECK: INVESTMENTS THAT AVERTED DEPRESSION NOW PAYING DIVIDENDS FOR TAXPAYERS

Recent headlines tell the story: Investments we made to avert a second Great Depression have not only been largely recovered, they are also paying dividends for taxpayers. Americans taxpayers are earning returns on their investments while companies end their involvement in government programs on or ahead of schedule. So will Republicans who once predicted disaster admit that they were wrong? We are not holding our breath.

FINANCIAL BAILOUT WILL MAKE TAXPAYERS $35 BILLION IN PROFIT. “The government’s heavily criticized $700 billion financial rescue program has earned nearly $35 billion in income over the past two years, according to data obtained by The Associated Press. The data showed that income from the Troubled Asset Relief Program rose nearly 17 percent through November, compared to where it stood in October. The income was boosted by the government’s ongoing sales of Citigroup stock. [ Associated Press, “Treasury: Financial bailout income at $35 billion,” December 10, 2010]

TREASURY WILL MAKE $12 BILLION FOR TAXPAYERS FROM CITIGROUP ALONE.“The Treasury Department plans to sell the rest of its stake in Citigroup, a move that would allow the government to end its ownership in the bailed-out banking giant while turning a $12 billion total profit for taxpayers. [Washington Post, “Government sells remaining shares in Citigroup; investment to net $12 billion total profit for taxpayers,” December 7, 2010]

TAXPAYERS RECOVER BILLIONS IN GM STOCK OFFERING.“American taxpayers’ ownership of General Motors was halved on Wednesday, and billions of dollars in bailout money was returned to the federal government, as a result one of the nation’s largest initial stock offerings ever…Still, now that General Motors has shown that it can be profitable, a complete exit by the government could happen even within the next two years. With the offering, G.M. is shedding its ties to the government faster than expected, cutting the Treasury Department’s ownership stake to 26 percent, from nearly 61 percent.” [NY Times, “U.S. Taxpayers Recover Billions in Sale of G.M. Stock,” November 17, 2010]

FROM BANKRUPTCY TO BIGGEST AMERICAN IPO IN UNDER TWO YEARS.“Seventeen months after veering into bankruptcy, General Motors has become the unlikely darling of Wall Street, poised to complete an initial public offering Thursday that will fetch more than $20 billion and rank as one of the largest in history.” [Washington Post, “General Motors' public offering may net $20 billion,” November 18, 2010]

BANK OF AMERICA SET TO REPAY TAXPAYERS IN FULL.“Bank of America has told US regulators that it has sold enough assets this year to meet the final condition that was set on its landmark plan to repay $45bn in government bail-out funding. … According to Treasury officials, 122 Tarp recipients – including the country’s biggest banks – have now repaid all, or a portion, of their government aid.” [Financial Times, “BofA says it haqs met condition of TARP Exit,” December 5, 2010]

OTHER MAJOR BANKS ALREADY REPAID TAXPAYERS, WITH INTEREST.“JPMorgan Chase and nine other big banks said Wednesday that they had repaid the federal assistance money that they received in the fall during the height of the financial crisis. JPMorgan said it had returned $25 billion, with interest, to the government — money that the bank’s chief executive, Jamie Dimon, has said it never needed in the first place. Morgan Stanley and Goldman Sachs said in separate announcements that they had each repaid their $10 billion in federal aid, joining a parade of financial institutions making their exit from the government rescue program. By late Wednesday afternoon, all 10 banks allowed to exit the government’s Troubled Asset Relief Program had said they had repaid the TARP money. Among them, American Express returned $3.39 billion, Bank of New York Mellon $3 billion, Capital One Financial $3.57 billion, State Street $2 billion and Northern Trust $1.58 billion.” [NY Times, “JPMorgan and 9 Other Banks Repay TARP Money,” June 17, 2009]

AIG AGREED TO PAY BACK TAXPAYERS $21 BILLION IN 2011. “American International Group Inc. struck a deal to repay its Federal Reserve credit line as the insurer seeks independence from the government. AIG will use proceeds from the sales of two non-U.S. life insurance units, the New York-based company said today in a regulatory filing announcing the agreement with regulators including the U.S. Treasury Department.” [Bloomberg, “AIG Agrees to Repay Fed Credit Line in Deal with U.S. Treasury,” December 8, 2010]

CBO ESTIMATE OF TARP COST HAS DROPPED SUBSTANTIALLY. “CBO’s current estimate of the cost—$25 billion—is substantially less than the $66 billion estimate incorporated in the agency’s latest baseline budget projections (issued in August 2010) and the $109 billion estimate shown in the agency’s previous report on the TARP (issued in March 2010).”   [CBO Report on the Troubled Asset Relief Program, November 2010]

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