Where Did the TARP Money Go?

[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/

 

[Tsing Tao]

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.

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)...

QE is, indeed, a powerful tool for rescuing an economy on the brink!

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...

 

[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.

 

[piezoe]

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...

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

 

[piezoe]

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.

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.

 

[TGregg]

Great thread, Piezoe. Thanks.

 

[Tsing Tao]

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).

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

In the case of GM, the government took an equity position, essentially putting GM temporarily in receivership. (The government has since divested itself of most of the stock , perhaps all, at a profit to the tax payers.)

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.

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.

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.​

Consistency is good, but being consistently wrong is not.

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

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.

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.

 

[Tsing Tao]

Great thread, Piezoe. Thanks.

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

 

[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.

Quite a change from your statement in the QE thread that said:
I did say "perhaps", but the way I punctuated the sentence says clearly that we made a profit, and we did not!. I hadn't looked at the GM tally in quite a while when I wrote that. I was entirely wrong! Sorry to have misled you.

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. GOOD!


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.

The Analysis posted above is not entirely correct. The same tax rules which AIG used applied to any company with the same qualifications. You or I may take a mortgage interest deduction if we qualify. Another tax payer who doesn't qualify may not take that deduction. Is that preferential treatment? According to the analysis you posted, it is!

The true cost of capital in this instance was close to zero, and the Fed made a profit of over 17 billion on the AIG deal and the Treasury made a profit of over 5 billion. Your analyst failed to realize that the Fed is just an independent government agency, it works, on a daily basis, hand in glove with the U.S. Treasury, and all net profits of the Federal Reserve flow directly back to Treasury, and hence to we taxpayers. Your analyst is treating the AIG bailout as though it were a private sector action. It wasn't.​

You're quite good at dishing out advice, but lack the ability to actually follow that advice.
At least Tsing Tao has acknowledged that I'm good at something, but please keep in mind that's an opinion, and he might be wrong.

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.

N.B. The underlining above is Piezoe's, and was not there in the original quote from Tsing Tao

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.

 

[Tsing Tao]

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.

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.