Estimate of TARP's Cost to Taxpayers Increases

[G_j]

http://online.wsj.com/article/SB123880278764488701.html#mod=rss_whats_news_us

ARIL 4, 2009
Estimate of TARP's Cost to Taxpayers Increases

By DAVID WESSEL

WASHINGTON -- The Congressional Budget Office has quietly altered its estimate of the ultimate cost to taxpayers of the $700 billion Troubled Asset Relief Program, now figuring the initiative will be much more expensive in the long run than it previously figured.

Some TARP outlays eventually will be returned to the government as banks return capital the Treasury has invested in them or as the government sells loans or securities it acquires as part of the financial rescue.

In January, the CBO pegged the ultimate cost to taxpayers of the $700 billion TARP at $189 billion. When the agency issued revised numbers in late March, it revised that to $356 billion, a change that drew little attention. The larger estimate reflects, among other things, the Treasury's move to use the TARP to help avoid foreclosures, as well as the changing details of its aid to American International Group Inc., and the deterioration of financial conditions and of banks in which the Treasury has invested TARP money.

The CBO estimates the program's ultimate cost using techniques similar to those generally applied to federal loans and loan guarantees, and adjusts for market risk. More precisely, it puts the net cost to taxpayers at the difference between what Treasury pays for investments or lends to firms and "the present value, adjusted for market risk of any future earnings from holding purchased assets and the proceeds from their eventual sale."

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[ProdigalJunkMail]

1. let's hope no one finds this to be a surprise

the gov't is NEVER EVER EVER right on numbers...it is like they mean nothing at all...

sP

[RUMMYisFROSTED]

2. My guess: $700B, plus interest.

:think:

[hendo]

3. How nice of them.

I sure do love how they gave money to the problem rather than correcting it.

[G_j]

4. ***

[FudaFuda]

5. I'd just like to know why the government is refusing banks trying to pay it back, w/ interest.

There was an editorial about it in yesterday's Wall St. Journal. Yeah, I know, not a popular paper around here. But it reported that the administration had apparently refused a major bank's attempt to return their TARP funds, with interest. Guess the govt. likes having its hand on the wheel.