Just a reminder: TARP still at least $123 billion in red

posted at 2:55 pm on March 17, 2011 by Ed Morrissey

The Obama administration has gone on an odd public-relations blitz to prop up the public’s perception of TARP, as ProPublica’s Paul Kiel notices.  TARP originated in the Bush administration and became so politically toxic that it would make an easy talking point for Barack Obama to use to disparage GOP fiscal stewardship.  However, Obama’s use of TARP to engineer his own government interventions in private markets means that he needs to convince taxpayers that TARP not only saved the American economy but will be a good investment over the long run.

Unfortunately, as Kiel reports, that’s simply not true.  After spending $700 billion nearly three years ago, more than a third of it is still red ink, and probably unrecoverable:

At ProPublica, we’ve provided a comprehensive bailout database since TARP’s launch. It shows not only how much money has gone to each recipient, but how much each has paid in interest and dividend payments. With all this data, we’re able to clearly show how deep in the hole the program remains. And the answer as of today is $123 billion.

Add that to the bailout of Fannie Mae and Freddie Mac — which our site also tracks and is separate from the TARP — and taxpayers are $257 billion in the hole.

Although the bailout has extended to nearly a thousand institutions, just a few are primarily responsible for the continued deficit: Fannie and Freddie, of course, AIG, and the auto companies (GMChryslerGMAC).

Fannie and Freddie account for slightly more than half of the red ink, as noted above.  Those were part of the original TARP rescue effort, although the Obama administration is the one that requested and received a repeal of the cap for capital infusions into both GSEs.  The original TARP plan capped the potential subsidies to $200 million.  To this day, the White House has yet to propose a plan to close down Fannie and Freddie and end their connection to the federal government.

But that’s only half of the red ink.  Most of the other half comes from AIG’s bailout, which is expected to end up with a small profit for taxpayers as Treasury sells its 92% stake in the underwriter, and Obama’s own TARP projects:

But the government’s rescue of the auto industry (specifically, GMChrysler, and GMAC) almost certainly won’t ever make its way out of the red. As of today, the hole is $47 billion.

George Bush’s private-sector recipients were entirely related to the financial industry — banks and AIG, which insured financial transactions.  The banks have all repaid their TARP grants, with interest, and the money will eventually come out of AIG.  But the money sunk into the automakers will almost never get repaid, as is the case for the money from the two GSEs, especially the continuing cash they absorb in winding down their portfolios.

Not only that, but as TARP’s special inspector Neil Barofsky testified earlier this month, even the public uses of TARP under the Obama administration have been a bust:

In prepared testimony Wednesday before a House subcommittee on housing, Barofsky said the unpleasant truth about most HAMP loan modifications was not just that they failed but that, after trials stretching for many months, they left participants in worse financial shape than when they began.

It’s a problem Geithner has refused to face, although the Treasury secretary has acknowledged that the incentives paid to loan servicers under HAMP “have not been powerful enough,” Barofsky said in the testimony, which was posted online by the House Financial Services Committee.

Citing “near universal agreement” that HAMP has failed to meet its goals, Barofsky noted that current debate centers “on whether the program should be terminated, replaced or revamped.”

“Treasury, it seems, stands alone in defending the status quo,” he said.

The watchdog panel overseeing TARP said that its continuing operation sends strong signals that the US will bail out financial institutions rather than allow them to suffer the consequences of their bad decisions:

The watchdog panel for the $700 billion bank bailout faulted the U.S. government for the last time on Wednesday, saying the program helped underpin the perception that federal authorities will always prevent troubled financial firms from failing.

In its final report on the bank bailout, the panel attacked the government for not being transparent enough and not articulating clear goals for its foreclosure prevention program.

It also said federal intervention transformed the notion of ‘too big to fail’ into a stark reality.

That’s what the public-relations blitz wants to defend — a status quo painted in deeply red ink, with the backing of the federal government.


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But Michael Moore said we have lots of money, so what’s the big diff?

adamsmith on March 17, 2011 at 3:01 PM

I’m shocked….shocked I tell you….

SPGuy on March 17, 2011 at 3:03 PM

Add that to the bailout of Fannie Mae and Freddie Mac — which our site also tracks and is separate from the TARP — and taxpayers are $257 billion in the hole.

And if you add a whole bunch of other things to it that are also not TARP, then it goes even higher! Why won’t the Treasury Dept report on all the stuff we could have added to it in our heads?

Proud Rino on March 17, 2011 at 3:04 PM

At what point will the media report on the disposition of the 350 billion spent under Bush vs the 350 billion spent under Obama?

Freddy on March 17, 2011 at 3:07 PM

All-Time Jackass Comment Of The Day:

Donnie Deutsch today on Morning Schmo, referring to Pres. Obama: …”we’ve got some damn good leaders in this country.”

pilamaye on March 17, 2011 at 3:12 PM

Irony is honey-sweet.

NJ shuts down school named Obama, due to

How fitting that a school named after our profligate, post-achievement president is shutting down thanks to fiscal mismanagement and non-achievement.

Schadenfreude on March 17, 2011 at 3:13 PM

I haven’t heard Joey Boy Biden say a peep about any of this in a long, long time. Wasn’t he supposed to be the overseer of these funds? Is there anyone in this administration who is doing what they were elected to do? Hahahaha, what a dumba@@ question that was.

scalleywag on March 17, 2011 at 3:13 PM

Gee, I thought Government Motors paid off its taxpayer-funded loans “in full, with interest,” That’s what GM’s Chief Executive Tool Ed Whitacre said to us on TV, with a totally straight face.

Oh wait. The “taxpayer-funded loan” portion of GM’s TARP funds was just a tiny, easy-to-pay-off sliver of the total amount that the feds dumped into the company. Kind of forgot to mention that, eh Mr. Whitacre?

Dishonest pricks.

Cicero43 on March 17, 2011 at 3:13 PM

OT but delicious:

NJ ordered the closing of the Barack H. Obama Elementary School

faraway on March 17, 2011 at 3:14 PM

The sentence “But the money sunk into the automakers will almost never get repaid …” makes no sense … as the govt holds shares in GM which it can sell in the open market at any time.

sanjeevn on March 17, 2011 at 3:14 PM

Ugh. Without Fannie/Freddie, it’s 1/8th a trillion. With the Macs, it’s 1/4 trillion. It’s twice as much. So why not just toss in everything and call it $250 billion? Making it sound like Fannie/Freddie drive up to the “trillions” is very MSMish.

How about just say “TARP still in Sagan-area of Red? That is, the Billions and Billions.”

Nethicus on March 17, 2011 at 3:18 PM

faraway on March 17, 2011 at 3:14 PM

Chris Christie strikes again!

Brat on March 17, 2011 at 3:27 PM

I distinctly remember being told that not only would this money be paid back but that the U.S. Treasury would make money on the deal. I’ve been robbed!!!!!!!

Cindy Munford on March 17, 2011 at 3:28 PM

The sentence “But the money sunk into the automakers will almost never get repaid …” makes no sense … as the govt holds shares in GM which it can sell in the open market at any time.

sanjeevn on March 17, 2011 at 3:14 PM

It makes perfect sense:

Now, as GM prepares for its IPO, the math has been done and it has been revealed that the stock will need to sell at $131.42 per share just for the government to break even, according to a letter sent by Treasury Department inspector general Neil Barofsky

http://www.leftlanenews.com/treasury-gm-stock-needs-to-sell-at-130-to-recoup-bailout-money.html

GM is currently trading at $100 less than that:
http://finance.yahoo.com/q?s=gm&ql=1
http://www.leftlanenews.com/treasury-gm-stock-needs-to-sell-at-130-to-recoup-bailout-money.html

strictnein on March 17, 2011 at 3:29 PM

strictnein on March 17, 2011 at 3:29 PM

The federal government cannot dump shares in Government Motors without driving down the price substantially. The market will also see the sale as ending the special treatments that GM has been getting from little Bammie and thereby expose the company to the free market.

And then there’s the special tax treatment given to Government Motors: Rasmusen Presents The Lawlessness of the GM NOL Ruling

Following the current democratic party doublespeak standards, that special tax treatment has to be considered ‘spending’. It appears to me that this spending is not included in ProPublica’s tabulation.

slickwillie2001 on March 17, 2011 at 3:43 PM

slickwillie2001 on March 17, 2011 at 3:43 PM

Yep. Agreed.

One other interesting tidbit. Guess who doesn’t report as a major GM shareholder:
http://finance.yahoo.com/q/mh?s=GM+Major+Holders

strictnein on March 17, 2011 at 3:47 PM

NJ shuts down school named Obama, due to

How fitting that a school named after our profligate, post-achievement president is shutting down thanks to fiscal mismanagement and non-achievement.
Schadenfreude on March 17, 2011 at 3:13 PM

m-m-m m-m-m m-m-m…

Khun Joe on March 17, 2011 at 3:51 PM

Donnie Deutsch today on Morning Schmo, referring to Pres. Obama: …”we’ve got some damn good leaders in this country.”

pilamaye on March 17, 2011 at 3:12 PM

And in 2012, we’ll finally have her as President! :)

dominigan on March 17, 2011 at 4:05 PM

sanjeevn on March 17, 2011 at 3:14 PM

You’ve never read a balance sheet or calculated a market capitalization, have you?

ExpressoBold on March 17, 2011 at 4:06 PM

Proud Rino on March 17, 2011 at 3:04 PM

Do you mean “Stimulus Funds?” Yeah, they’re not TARP either but a good little Democrat like you should know that they are more related than dissimilar. The Office of the Ø Presumptive Presiduncy” followed by The Office of the Presidunce” directed all spending for TARP and Stimulus Funds plus got the Supremes to screw GM bondholders in the government takeover of a private company.
.
Just remember this: TARP never fulfilled its agreed-upon legislative purpose and under the direction of Hank Paulson did “something else with the money” leaving the toxic MBS investments (derivatives) on the banks’ books for another day (actually, another bailout).

ExpressoBold on March 17, 2011 at 4:16 PM

Let’s see, hundreds of billions of dollars added to the debt vs. millions of auto industry jobs lost (virtual wipeout of American auto industry), complete collapse of entire global economy, millions more foreclosures, millions more jobs lost. I think I’d take the former. You idiots would actually make an argument for the latter, or some existential argument about capitalism demanding winners and losers completely detached from reality. Get real. TARP served its purpose and the country’s better off for it.

underceij on March 17, 2011 at 4:18 PM

The sentence “But the money sunk into the automakers will almost never get repaid …” makes no sense … as the govt holds shares in GM which it can sell in the open market at any time.

sanjeevn on March 17, 2011 at 3:14 PM

Now, as GM prepares for its IPO, the math has been done and it has been revealed that the stock will need to sell at $131.42 per share just for the government to break even, according to a letter sent by Treasury Department inspector general Neil Barofsky

General Motors Company Common S (NYSE: GM )
After Hours: 31.46

Right now you’re $100 per share short.
IF you’re banking on a stock to increase it’s value by more than 3x it’s value to pay off… you’re chasing a dream.

As an investor, I’d just cut my losses and try to make that money elsewhere… it would take decades of good solid growth to get that money back… and I don’t see GM lasting that long under current UAW leadership.

Yeah… I’d say that’s pretty close to a sunk cost in the short and possibly long term.

Chaz706 on March 17, 2011 at 4:25 PM

Let’s see, hundreds of billions of dollars added to the debt vs. millions of auto industry jobs lost (virtual wipeout of American auto industry), complete collapse of entire global economy, millions more foreclosures, millions more jobs lost. I think I’d take the former. You idiots would actually make an argument for the latter, or some existential argument about capitalism demanding winners and losers completely detached from reality. Get real. TARP served its purpose and the country’s better off for it.

underceij on March 17, 2011 at 4:18 PM

The money sent to the banks performed it’s purpose just fine thank you very much. That was all done under the Bush admin and we’ve made a profit on that cash.

What we’re worried about is all the money to Fannie/Freddie. We just gave it to them and now… we might as well just kiss it goodbye. There’s no way we’ll ever see a dime of that back.

That and the money we gave to GM… we may be lucky to see a good ROI in 10-20 years… if we and GM last that long.

That and stimulus (OT perhaps but worth talking bout). That’s pretty much just spent money for nothing.

Chaz706 on March 17, 2011 at 4:27 PM

The banks have all repaid their TARP grants

Most of them NEVER needed the money in the first place!

GarandFan on March 17, 2011 at 4:36 PM

Do you mean “Stimulus Funds?” Yeah, they’re not TARP either

ExpressoBold on March 17, 2011 at 4:16 PM

Right, so when we’re evaluating TARP, let’s stop putting things that are not TARP in that evaluation.

Proud Rino on March 17, 2011 at 4:38 PM

I have heard analysts on both sides of the aisle state quite publicly that TARP is on the way to either breaking even or turning a profit. In fact the money that was loaned out when Bush was President has already been paid back.

TARP is not the auto bailout or the stimulus and it is not Fannie Mae or Freddie Mac..it was an emergency measure that was taken to stop a complete meltdown of the economy, and it succeeded. There were no good alternatives at the time and TARP might be seen as a necessary evil. I do believe that if Bush had not gone along with the plan and had the worst happened a lot of the people who say he should not have done it, would be complaining about his lack of action.

Terrye on March 17, 2011 at 5:03 PM

What happens to the TARP money when it is paid back from each recipient to the The U.S.Treasury/Government? Is it given back to Congress to spend on new pet projects? Or do they pay down the U.S. debt? If it is spent by Congress, then the promise that tax payers will get back the money, is a outright lie…

casey92 on March 17, 2011 at 5:14 PM

Right, so when we’re evaluating TARP, let’s stop putting things that are not TARP in that evaluation.

Proud Rino on March 17, 2011 at 4:38 PM

Translation: “Stop saying things that make me look like an obama bootlicker ya big meanies!!!” Proud Rino

runawayyyy on March 17, 2011 at 5:54 PM

Sitting in the Miami airport this morning I was subjected to CNN and the financial analysis babe. She sat right there with a straight face telling people that the TARP money had all been paid back and taxpayers like her wouldn’t have to pay a dime. I said out loud, so that some turned their heads, you are a liar. So Obamas propaganda media is in full swing. They truly are media whores.

wepeople on March 17, 2011 at 9:18 PM

TARP is not the auto bailout or the stimulus and it is not Fannie Mae or Freddie Mac…
Terrye on March 17, 2011 at 5:03 PM

The auto bailout was in fact done using funds authorized under TARP and never distributed to banks. The auto bailout IS part of TARP.

SD on March 18, 2011 at 3:42 PM