U.S. Forecasts Smaller Loss From Bailout of Banks

[TomCADem]

Source: NY Times

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

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This may explain why the Obama administration is looking into using the TARP money for a job bill, and why Republicans are opposing these efforts.

[Pirate Smile]

1. Good news.

[Hubert Flottz]

2. I'm guessing the CEOs split the $42 billion

[notesdev]

3. I'm suspicious

We have no reason to believe the banks are in any better shape then when the money was doled out... housing isn't any better (it's worse), and the CRE monster is looming. I know a lot of the worst garbage has been pushed onto the Fed's balance sheet, but the numbers aren't large enough to get them a significant way towards solving the key problems. CC defaults are spiking, ARMs heading to recast, the FDIC is bankrupt, and it's just not possible that through speculation, fees and rate hikes they've managed to make up the debt gap.

Something is missing here but I can't quite put my finger on it.

[karynnj]

9. What is missing is the 30% market crash that you predicted almost 4 months ago that would happen by

in three months.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=68834&mesg_id=68838

[notesdev]

11. the timing was off

But it is coming, and it won't be long. I honestly didn't think that they would instead choose to have the damage done to the currency (and was not at all alone in thinking this). Patience, grasshopper.

[lonestarnot]

4. And the second round of mortgage busts?

How many short sales pending?

[FBaggins]

5. Administration to slash bailout cost estimate

Source: AP

WASHINGTON (AP) -- The Obama administration plans to cut its estimate of the projected costs of the government bailout program by more than $200 billion and is looking at using part of the savings to fund new job creation efforts. A Treasury official said Sunday that the administration now believes the cost of the financial rescue program will be at least $200 billion below the $341 billion estimate it made in August.

The official, who spoke on condition of anonymity because the administration's new projection has not been released, said the reduced cost estimate reflected faster repayments by big banks and less spending on some of the rescue programs.

The administration had made the $341 billion estimate as part of its midsession budget review released in August.

The official said the new estimate will become part of the administration's new budget, which President Barack Obama will present to Congress in February.


Read more: http://finance.yahoo.com/news/Administration-to-slash-apf-2885874493.html?x=0&sec=topStories&pos=main&asset=&ccode=

[Kdillard]

6. That is excellent news.

[FBaggins]

7. I guess that depends on your perspective.

Smaller deficit certainly isn't a bad thing... and I'm sure we're all happy that TARP isn't as expensive as it might have otherwise been - but some people think it's premature (at best) for many of those banks to be paying back our tax dollars.

[Soylent Brice]

8. K&R

[SpartanDem]

10. Good

and I hope the reports are true that TARP funds will used the jobs bill