U.S. Forecasts Smaller Loss From Bailout of Banks

[kpete]

Source: New York Times

U.S. Forecasts Smaller Loss From Bailout of Banks

By JACKIE CALMES
Published: December 6, 2009

WASHINGTON — The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.

The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. That figure anticipated more financial troubles requiring intervention.

The officials said the government could ultimately lose $100 billion more from the bailout program in new loans to banks, aid to troubled homeowners and credit to small businesses.

Still, the new estimates would lower the administration’s deficit forecast for this fiscal year, which began in October, to about $1.3 trillion, from $1.5 trillion.

Read more: http://www.nytimes.com/2009/12/07/business/07tarp.html?_r=2&hp

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Administration slashes bailout loss estimate by $200 billion
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/06/AR2009120603133.html?hpid=topnews

[superconnected]

1. I don't understand at what point they had a pay back clause in this.

I thought they didn't.

[dmallind]

2. Not only payback, but dividends too.

Whether the banks are paying the help back for good or bad reasons, it's not a bad thing that they are paying back.

[superconnected]

4. I agree it's not a bad thing at all, however, I'm worried this is all a flat out lie

because from what I remember there were no strings attached and talk of putting in guidelines came at the end of the great give away but were never implemented. I never heard that they would have to pay the money back.

So at what point was there pay back and I'm guessing interest or dividends or however the gov made a profit on this? All of this is news to me. I don't understand all of those bonuses and trips to Greece if they had to pay the money back. It sounds more plausible that they didn't have to, and I mean through most of the give away. They certainly were spending like it was mad money.

[Igel]

12. Yes and no.

They were expected to pay a portion of it back. They were expected to pay interest, 5% IIRC. They were expected to issue preferred stock for a portion of the monies they received. Ideally, the Treasury dept. would make money on it; in a worse case scenario, they'd lose hundreds of billions of dollars.

That was just about all the strings attached up front: We give you money, you give us money and stock. The one real string was that the money could not come at the expense of capitalization--either they earn money to repay the "loan" or they have to get investment to replace the loan.

The other strings involved pay, quibbles and pressure over how much money was being loaned out, etc., etc. Those weren't included in the original agreement.

[tridim]

3. I keep imagining where we'd be if McPalin had won

There is no doubt that none of the TARP funds would have been paid back. These profits would now be in the CEO's off shore accounts, tax free.

[tylerdee]

5. U.S. bank bailout drastically cut by $200 billion

Source: Reuters

The projected long-term cost of the U.S. government's bailout of the nation's big banks is going to be at least $200 billion less than previously thought, according to a Treasury Department official.


Read more: http://www.reuters.com/article/idUSTRE5B60KF20091207

[Vidar]

6. "Projected long-term cost": nothing has really changed, but they qre giving

us rosier guesstimates.

[superconnected]

9. Okay, but their press secretary just said they expect to recover all but 42 billion

"WASHINGTON — The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year"

[fascisthunter]

7. that 200 billion would help a lot of people in debt

how about giving it to the people, since its our money!?

[TacticalPeek]

8. Cost less? I thought the taxpayers were supposed to make a profit?

Damn fine print.

[Democrats_win]

10. Let me get this straight: Rich banksters took our money and won't be giving it ALL back?

Worse, they're going after their victims, poor Americans, and demanding that every penny be paid back with usury interest rates.

Is that about it?

[BREMPRO]

11. more good news for DU ers to criticize.

maybe eventually they will wake up to the fact Obama's financial team is not a bunch of hacks and wall street shills, but actually working earnestly for the financial security and stability of the nation. And succeeding.

[Igel]

13. The team's policies were mostly

formulated a year ago and put in place a year ago. As far as financial institutions go. What you're praising isn't anything Obama-related, per se.

The rest of it was improvised later--GM, etc., etc. It's hard to know how to evaluate that because short term, drastic distortions to markets make it hard to compare year over year. You essentially have to get some time between you and when the distortions stopped and do some data smoothing to see if the distortions actually mask anything interesting. Early in the game your assumptions dictate your results, and that's where we are.

[BREMPRO]

14. True, but he didn't reverse the policy, his team continued to implement it

effectively(which is no small feat given the circumstances) and required more accountability from bailed out firms. it's still early, but the news is certainly good.

[mbperrin]

15. Loss? Loss? I want the PROFITS promised to the taxpayers.

Period.

Trying to spin PROFITS into billions of dollars of losses is a great CON.

Let's see if it works on the weak minded.