The banks paid back everything they borrowed with interest.

[kentuck]

So what's the big deal?

How many times have we heard that explanation?

The Fed loaned them the money to keep some of them from going under. But they decided to loan money to all of them so the bad banks would be indistinguishable from the good banks.

But how do they pay us back for the credit default swaps and the bad mortgages and the bad economy and the loss of jobs and the worst recession since the Great Depression? It is not just about how much money they have borrowed. It is about the damage to our entire society.

Could we please stop that nonsensical explanation?

[PeaceNikki]

1. This is the important point.

They were bailed out but won't help the people who they screwed over while creating the mess. It's not about the money they borrowed, it's about the lives they ruin to turn profits.

[mod mom]

2. +1

[banned from Kos]

8. True -- but its been done many times before

A cycle of easy credit is followed by a period of too-tight credit.

Everyone from Marx to Keynes and Hayek wrote about it.

[jwirr]

26. And there were regulations in place to prevent them using the money

of people who just banked with them but would have never took the risks of stocks. They paid to get rid of those regulations. There is no excuse for what they did.

[DirkGently]

3. And they've used their taxpayer-provided solvency to lobby against reform to stop it happening AGAIN

[Arctic Dave]

4. Gee, and how did they pay it back. By buying oil futures and screwing us again

by jacking the price of oil and other commodities.

So much for lending it out to "keep the wheels of commerce greased".

[rdking647]

6. it wasnt the banks buying oil futures...

[Arctic Dave]

31. First one I picked. For yopur reading pleasure.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6055920

There other links to stories of how banks were some the largest buyers. Somewhere there is a chart of the largest buyers and the majority were banks while the others were actually refiners.

[girl gone mad]

22. Actually, they didn't pay it back.

We still have at least $1.5 trillion in bank and mortgage support outstanding.

[Arctic Dave]

30. I did not know that. Interesting. nt

[DaveJ]

Couldn't agree more

It's exactly like a movie when the hero pulls the villain up hanging from a cliff, then the villain tries to shot the hero in the back.

We should not help those who do not support our best interest.

[Name removed]

5. Deleted message

Message removed by moderator. Click here to review the message board rules.

[PSPS]

11. Yours is a very important point.

The toxic mortgages, mostly liar's loans, were transferred from the banks to the taxpayers to the tune of over $1 trillion.

[banned from Kos]

13. Nope - your chart identifies the MBS as "agency" securities

that would mean GSE - Fannie or Freddie (not private banks).

Fannie and Freddie MBS are still selling at par (but only due to Treasury backstops).

[girl gone mad]

23. The GSE's were privately owned..

until Geithner and co. decided to socialize Wall Street's losses.

[PSPS]

33. Yes, that's the distinction. What were private obligations (banks) are now the taxpayers'.

But the post I replied to was deleted for some reason, so this is now a non sequitur.

[DenverDad]

7. Not to mention the six and seven figure bonuses

they awarded themselves for destroying the economy.

[Dr Fate]

9. Give me and other middle classers just a few thousand bucks and we can do the same.

Nt

[Firebrand Gary]

10. Meanwhile they dramatically expanded their asset allocations.

[Turbineguy]

12. Remember back in the days before

the embedded security in the car stereos?

Somebody would do $1000 damage to your car and sell the stolen radio for $30.

The banks did trillions in damage, borrowed relatively little money from the Fed, paid it back and people got fat bonuses for keeping the bank solvent.

[gratuitous]

14. And they didn't change their ways one bit

Wouldn't it have been nice if, as a condition for being bailed out, we had enacted a law or two against the kind of robber baron capitalism that led to this debacle in the first place? But we hated hearing the bleating of the Republicans more than we wanted to see a more economically just system, so we handed the banksters free money and didn't attach any conditions.



Tell me again the one about how tough the wealthy have it. That one allus cracks me up.

[On the Road]

15. It's a Response to People Who Hated TARP

and were claiming that the bank bailout was both unnecessary and cost the government hundreds of billions of dollars.

It does NOT exonerate banks from any bad behavior. But in political terms, refuting a poor secondary argument can disguise other criticisms on the subject. That's why it is important to avoid bad political arguments in the first place.

[girl gone mad]

24. It was unnecessary and it did cost the people hundreds of billions, if not trillions, of dollars.

Both claims are true, as are most of the other arguments critics of the crappy bailouts made.

The banks did not use the money to increase lending, as was promised. They used it to speculate, just as critics warned they would. Bank executives continued to loot and pay themselves massive bonuses. No one was held accountable for the massive amounts of fraud that caused our economy to collapse. The banks are no better capitalized now than they were in 2008 and another crisis will leave us in exactly the same position we were at the peak of the crisis.

It was horrible policy and now we see the consequences very clearly: more middle class suffering, sovereign debt risk, political turmoil and widespread social unrest.

[On the Road]

32. CItation Needed

All the money was paid back except for a portion of AIG and some small banks. Other than that, it's just loaded words like 'looting.' This is why this stuff has no traction.

[girl gone mad]

34. No, it was not all paid back.

TARP was paid back, but TARP was tiny compared to the non-TARP bailouts. The banks were only able to get out of TARP because Geithner came up with some shady tax forgiveness schemes and allowed them to funnel money from other backdoor government bailout programs that offered even less strings and oversight than TARP. They certainly did not recapitalize via traditional means, and they remain unhealthy to this day.

Furthermore, I think it's absurd that people talk about banks "paying us back" as if the banks invented some new technology or created amazing new products or were engaged in any other type of productive activity that might increase our wealth or reduce our trade gap. In reality, the banks are merely parasites. The only way they can "pay us back" is by extracting various rents and fees, in the process removing more money from the productive economy. We never required them to cut compensation or bonuses in exchange for the massive government support and they aren't about to reign themselves in.

Money Still Owed In Federal Bailout: $1.5 Trillion Still Owed to Treasury, Federal Reserve
August 3, 2011

A new study released today by the Center for Media and Democracy (CMD) shows that, despite rosy statements about the bailout's impending successful conclusion from federal government officials, $1.5 trillion of the $4.8 trillion in federal bailout funds are still outstanding.

The analysis, presented in charts and an online table and program profiles, is based entirely on government records. This comprehensive assessment of the bailout goes beyond the relatively small Troubled Asset Relief Program (TARP) program to look at the rest of the Treasury and Federal Reserve's multi-trillion dollar response to the financial crisis. It shows that while the TARP bailout of Wall Street (not including the bailout of the auto industry) amounted to $330 billion, the government also quietly spent $4.4 trillion more in efforts to stave off the collapse of the financial and mortgage lending sectors. The majority of these funds ($3.9 trillion) came from the Federal Reserve, which undertook the actions citing an obscure section of its charter.

"In order to understand the big picture on the bailout, you have to look beyond TARP and examine the trillions the Federal Reserve has disbursed to keep the big banks above water. $4.8 trillion went out the door to aid financial companies and repair the damage they caused to financial markets, and $1.5 trillion of that is still outstanding," said Mary Bottari, director of CMD's Real Economy Project.

TOTAL WALL STREET BAILOUT COST TABLE: You can click here to see our a full list of each bailout program, the amount of money disbursed and the amount of money outstanding in each program.

Most of the bailout funds were comprised of aid to banks – the peak outstanding amount was $2.2 trillion in January 2009 – which took place at the height of the financial crisis in the form of loans with below-market interest rates and for questionable collateral to banks directly from the Treasury and Federal Reserve.

http://www.prwatch.org/news/2011/08/10924/money-still-owed-federal-bailout-15-trillion-still-owed-treasury-federal-reserve

[On the Road]

35. Thank You for the Clarification

There is a lot of misunderstanding about the bailout, and it's sometimes hard to separate real costs from 'exposure,' secured loans, or other movements of money that aren't really costs. That Sourcewatch is a really good site.

From the link, it looks like the bulk of the $1.5T was for purchases of mortgage-backed securities from Fannie Mae and Freddie Mac (Funds Disbursed = $169B + $220B + $1128B).

The site defines “disbursed” as "funds that have either gone out the door or, as is common at the Federal Reserve, new balances that were created on the Fed’s balance sheet and placed in a specific account. “ I am assuming that some of these purchases were made simply by the second option, namely the Fed creating a new balance -- in other words, simply creating money. It would explain why the FNMA and FRMC costs didn't seem to add to the national debt and why there were no Congressional debates about budget items.

If the Fed had bought actual mortgages, presumably they would own the underlying properties which would offset much but not all of the cost. My understanding of mortgage-backed securities is that it depends on which 'tranche' it is -- the highest-interest-rate tranches can be wiped out completely, while the lowest ones contain a good chuck of the underlying secured assets. I didn't see any information on how much if any collateral is behind those MBS purchases.

[Cool Logic]

16. "But they decided to loan money to all of them so the bad banks would be indistinguishable from...

the good banks."

Actually, the good banks were doing just fine and did not want to take the fedgov's dirty money. However, they were forced to take it. Whatever happened to the concept of voluntary human relationships? Freedom means that individuals have a choice to cooperate or not, to deal with one another or not; pursuant to their own individual judgments, interests and values.

The U.S. government has a far uglier budget than any U.S. bank, with a deficit expected to be $1.3 trillion this year. It also is the home of $640 toilet seats and $1 trillion in missing transactions. No bank in the U.S. has been as irresponsible as that. So who is in a better position to urge banks to be more responsible–-the government or the free-market?

Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/14/AR2008101403378.html

[chill_wind]

17. The Bailout Scorecard

"Our frequently updated database tracks every dollar and every bailout recipient. Below is a summary generated from the latest numbers. (Here's a rundown of the bailout info our site offers.)

The Treasury Department is authorized to spend a maximum of $475 billion on the TARP (In July 2010, the financial regulation overhaul reduced TARP’s spending cap to $475 billion from the original $700 billion.)

Altogether, accounting for both bailouts, $580 billion has gone out the door—invested, loaned, or paid out—while $278 billion has been returned.

The Treasury has been earning a return on most of the money invested or loaned. So far, it has earned $67 billion. When those revenues are taken into account, $235 billion is the net still outstanding as of Oct. 5, 2011."


http://projects.propublica.org/bailout/main/summary

[girl gone mad]

28. and that doesn't include toxic mortgage support.

".....while the TARP bailout of Wall Street (not including the bailout of the auto industry) amounted to $330 billion, the government also quietly spent $4.4 trillion more in efforts to stave off the collapse of the financial and mortgage lending sectors. The majority of these funds ($3.9 trillion) came from the Federal Reserve, which undertook the actions citing an obscure section of its charter."

"..$4.8 trillion went out the door to aid financial companies and repair the damage they caused to financial markets, and $1.5 trillion of that is still outstanding."

[chill_wind]

29. Thanks!

(I posted the ProPublica, because even the most basic of the figures are not in dispute- in spite of insistence by the same old few, especially about all "that profit" we're getting..)

[truedelphi]

18. It is also a very devious and duplicitous response.

A person can consider that the banks have paid back the money loaned to them only if they accept the following facts:

The initial TARP of 700 Billion Plus was paid by some of the banks who used tax rebates in order to do so. Pay back your loan - have that pay back amount reduced from your taxes.

Some banks paid back TARP only to re-apply IMMEDIATELY for more TARP money.

Look at how Wells Fargo "purchased" Wachovia: Through applying various tax rebates and through its loss statement on its corporate 1040, Wells Fargo was basically rebated the entire purchase price of Wachovia.

But the bigger matter is the Nine to Fourteen Trillions of dollars that Bernanke created through digitalized bank accounts, for whatever banking friends he so favored.

Those loans have basically been "paid back" through the financial firms offering up their investment papers, of dubious value, as the loan repayment.

Which would be like you or me using last year's Yellow Pages to repay our student loans - except at least last year's Yellow pages do have value in terms of information for sales firms.

[FarLeftFist]

19. Corporate socialism proves that free-markets aren't free.

[Initech]

20. Yeah they paid it all back - to themselves!!!

[Name removed]

21. Deleted message

Message removed by moderator. Click here to review the message board rules.

[kentuck]

27. Just a couple of questions?

Who did they pay the money back to? Did it go to the Treasury or to the Fed?

The bottom line is not whether they paid back what was given or "loaned" but how much damage did they do to our economy and our society and now are being rewarded handsomely as if nothing ever happened.
How do they pay us back for those damages??

[jwirr]

25. They paid the government back but they did not do one thing about

all the money they caused the people to lose in the phony casino. That is to me the big deal. The grandmother who lost her savings, the college student who lost his college money. They are the big deal.

They got bailed out, we got sold out.

[ThomWV]

36. They may have paid back everything they borrowed but they kept what they stole.

[eilen]

37. TARP was just a small portion of the Recovery Act. nt

[WCGreen]

38. AMEN! K&R

[taught_me_patience]

39. The real bailout was through AIG, FNM, and FRE

That black hole, not only hasn't been repaid, but is getting deeper.