Taxpayers on hook as bailed-out firms fail

[brentspeak]

Source: Washington Post

NEW YORK -- A year ago, the financial system was tottering and government officials arranged a $2.3 billion emergency cash infusion into http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=CIT&nav=el">CIT Group, a troubled lender to small businesses.

Today, CIT is in bankruptcy court, and the taxpayers' investment is on the brink of being wiped out. It would be the largest loss so far from the government's massive rescue of the financial system, but it isn't likely to be the last.

Officials poured about $700 billion into investments in scores of companies, from giants like the automaker General Motors and the insurer American International Group to smaller regional banks. Of them, 33 have failed to make their most recent dividend payments to the government, as required under the bailout, a sign that they are strained for cash.

Last week, United Commercial Bank of San Francisco failed, becoming the first recipient of the Troubled Assets Relief Program, or TARP, to collapse. The cost to taxpayers: $299 million.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/11/15/AR2009111502280.html?hpid=topnews

---

Thank

God

it

passed

[boppers]

1. 2.6 billion out of 700 billion?

Less than 0.5% so far?

That seems like a fairly good return, considering that we've been making money on the other 99.5% of the money invested.

[brentspeak]

3. Yeah, what's a few billion here and there, especially when it's the taxpayer's money

:eyes:

The 2.6 billion is just for Citi; there's other banks not repaying TARP dividends, and at least one bank that's already gone kaput. Tell us how much money the taxpayer has made.

[boppers]

7. The 2.6 I got by adding Citi (2.3) and the bank (.3)

So far, we've actually laid out 472.5 billion (not 700, that's a talking point number, the maximum), adding up the different entities I've found, we've gotten back about 72 billion... here's a report on repayments:
http://cop.senate.gov/reports/library/report-071009-cop.cfm/

[AllentownJake]

5. The money that was put into AIG is never counted

Which essentially was funneled into the 13 largest banks in the world to pay for the derivative mess they created. Therefore, there is going to be a loss no matter what.

[girl gone mad]

11. Nope. Audits show that we are out $148.2 billion so far.

http://ethisphere.com/ethisphere-tarp-index-report/

What's more, the TARP Inspector General says the program will “almost certainly” result in a loss to taxpayers of tens of billions of dollars:

http://www.bloomberg.com/apps/news?pid=20601103&sid=a44MGDYGcZHk

We are not earning a good return on the money and we never will. Much of the money was never intended to be repaid, by design. There is no need to be disingenuous here. DUers are fairly well informed on this topic.

[NoUsername]

13. Thanks for posting that.

It gets rather old reading about how much profit we're making off of TARP when nothing could be further from the truth.

"Much of the money was never intended to be repaid, by design."

Yep. You nailed it. That's it in a nutshell.

[boppers]

14. Nice links.

I'm more informed because of them.

[54anickel]

2. Of course they're strained for cash. There wasn't enough "cash" to back up

the "wealth" created by Greenspan and friends. That wealth was derived, instruments of investments derived from other instruments of investments that had no real, tangible value to back them up. They can't convert virtual wealth into cash no matter how creative they get with the books. Either the created wealth deflates, or cash inflates to where the dollar has the purchasing power of a peso. Pick your poison...it's going to be extremely painful for this once richest nation of the world.

[DeSwiss]

4. Exactly right.

Capitalism's inherent and insidious weakness is its need for continual growth. In this case, they created growth from invisible wealth and exchanged it for tangible notes. It was legal in that while there were known risks, its was "calculated" that it could be borne if spread widely enough. Which was pure BS. And it wasn't. The rest was a fait accompli.

Unlike the other components within nature, capitalism isn't content with reaching an "equitable symbiosity" within the environment, where all parts of the system get something. It seeks to "jigger the results" and create more wealth through constant growth. But constant and uncontrolled growth is another way to describe cancer.

- If bodies can have this disease, then I suppose societies must as well....

[Blue_Tires]

9. +1

[scarletwoman]

10. +1+1

[Hannah Bell]

16. They created fake "wealth," exchanged it for real wealth (notes & IOUs),

& when some of those IOUs went bad, they got the citizenry to pay them off.

Meaning the citizenry is going to come out poorer, while they come out richer.

I think if more people really understood that--they're suffering, & will continue to suffer, so those bloated fucks can keep the money they "earned" with their fake "investments" - they'd be even more pissed than they already are.

[DeSwiss]

19. I agree that we citizens will come out poorer....

...but even while realizing that, I'm not so sure that people will direct their anger toward the correct source. In fact, who is that source? I'm not so sure I know who or what the "source" is anymore. Where does government end and business begin anymore? They seem more like opposite ends of the same dog to me. And then there's us.

Periodic peasant revolts began in recorded history in the late 1300s. In almost every instance, save the French Revolution and in Russia, they were put down, in most instances, quite easily. Largely due the the very lacks which was the cause of revolt to begin with: poor leadership, lack of basic resources, education and weapons. And there's nothing I can see that's changed that much in real terms, in this regard.

What's more telling is that these societal cancers like Goldman Sachs are simply doing what they know how to do. Exploit until there's only a hull left. All cancers kill their hosts in the end. That's why it seems so stupid and illogical to us practical sorts, and yet they somehow find a way to survive long enough to find another victim. How? Maybe that's because cancer isn't an enemy who comes from without, but rather is a portion of our own body gone mad and attacking itself.

And yet the people who could and are supposed to change what cancers like this can do (our elected T-cells), are reelected (by us) to their offices in which they in turn only further enable the cancer(s), rather than check their behavior. I don't blame Goldman Sachs for taking advantage of the absence of barriers and regulation. In fact, I expect them to try to remove those barriers as they did. What I didn't expect (but should have in retrospect) was for the Congress to be so dense and stupid as to forget what the absence of those barriers did to us before. But they did (http://www.youtube.com/watch?v=w2nZbo8SKbg">although not all of them did). And so it happened again. And the rich do these things because of their sense of entitlement. They really do believe that it all belongs to them. We're just holding on to a little of it for them.

So in the end, if we continue to reelect people to Congress who only further remove these barriers in the name of free enterprise and market growth, and just give us lip-service but no relief -- only for us to end up even further behind financially than we were since real-wage earning power has continually diminished since the 1960s.....

- ....then who is truly the blame?

on edit: spelling

[The2ndWheel]

20. It's not just capitalism

[boppers]

8. Yeah, some of the fake "wealth" isn't ever coming back.

TARP can't fix it, it can only string along companies as they lose some of their value, so a 50 billion dollar company can get a 5 billion TARP loan... and use that money to turn itself into a 40 billion dollar company. The hope is that the taxpayers get their 5 billion back, and that 10 billion of "wealth" is lost, rather thaan the whole 50.

[54anickel]

15. What you've just described is a faith based TARP and I guess I'm not as "hopeful" as the

folks that concocted the TARP idea.

Then again, I'm sure people thought the same thing when Nixon closed the "gold window" and the dollar's value became a game of confidence. That's managed to work thus far, though not without its share of problems.

[OhioChick]

6. K&R n/t

[Greyhound]

12. K&R.

So frustrating...
:grr:

[piratefish08]

17. As long as the bank and insurance execs are taken care of, then who are we to complain?

rah-rah

[Hubert Flottz]

18. Somebody has to pay those CEOs those big stacks of cash.

They work so hard!