US Received 8.5% Return From Bailouts: Report

[sabra]

Source: CNBC Reuters

U.S. taxpayers earned an annualized 8.5 percent return from the government's bailout of 49 financial firms, underscoring efforts by the industry to speed up repayments and warrant repurchases, according to a report by SNL Financial.

Firms such as Citigroup , which still has common shares held by the U.S. Treasury Department, and rivals that have made partial redemptions were excluded from the analysis, SNL Financial said in a statement Monday.

Proceeds from Troubled Asset Relief Program (TARP) warrant repurchases and auctions led to a surge in returns through March 30, SNL said.

So far, since the start of the program in late 2008, 64 institutions have fully repaid government aid.

Read more: http://www.cnbc.com/id/36178005

[NJmaverick]

1. K&R for news that should be the main headline of every MSM media source

but will not be covered. Better to let the voters remain ignorant and angry, is the way the MSM sees it.

[ClarkUSA]

2. It should be the main headline at GD and GDP to inform the ignorant and angry here at DU, too.

Hint, hint. ;)

[JackRiddler]

31. Bullshit!

Amazing what miracles can be worked when

- this ludicrous reckoning excludes the remaining TARP exposure, as the article notes

- the Fed lends the banksters unlimited money at zero percent

- the Fed offers to take on a trillion dollars in toxic assets in exchange for T-bills

- the Fed otherwise provides bailouts through money-prints so that its total bailouts are at least TEN TIMES higher than the TARP, which doesn't come with the restrictions of the TARP (which are laughable but still an abomination to the banksters to accept any limits)

- the Fed treats how much of this money is disposed as a national security secret and evades disclosure and audits

- the SEC suspends accounting rules and the market system altogether for the banksters, so that they are free to make up any number for the value of their assets (why can't I do that?)

- the propaganda machinery is looking for any excuse to pretend the depression ended and the banksters' institutions are doing well again...

- at a time when the banksters most need a good image because regulation is on the legislative agenda

And somehow I doubt you're ignorant of all this - merely willing to strategically omit 90 percent of the reality to fit your preferred agenda of apologetics for the banksters and support for the system of private capital that is destroying the world.

[NJmaverick]

34. The facts are not "bullshit"

your spin on the other hand....

[JackRiddler]

36. Some might take your content-free response as a confirmation...

that you know about each of the items I listed, and there's no answer to any of them that doesn't scratch up your preferred picture.

[NJmaverick]

43. It's been my experience that people who use terms like

"ludicrous", "banksters" and "propaganda machinery" are not interested in a facts based discussion.

[JackRiddler]

52. The banksters of Wall Street do not deserve the legitimation of being seen as anything other...

than a criminal class.

Now you use rhetoric as your excuse not to deal with the facts: Oh boohoo! I called our precious financial wizards "banksters," a term borrowed from Franklin Delano Roosevelt, father of the modern Democratic Party.

[zipplewrath]

56. Well, I know what you mean

but none the less, his basic point still stands. We made 8.5% on some loans that have been repaid. But there are huge loans still yet to be repaid (if they ever are). Furthemore, much of the TARP funds will never see these kinds of returns. And the results of the toxic assets still remains to be seen. That one could go one of several ways.

This latest report (which I've seen several times over the weekend) is a bit disengenuous in that it is an early, and limited, accounting. Nice and all, and factually correct. However, in the end it could easily be a case of the first class cabin on the Titanic being happy all the water has shifted towards the front of the boat.

[NJmaverick]

62. Currently it looks like future returns will be as good or better

there is always a chance of another major down turn (which would hurt these return rates) but right now that is looking pretty unlikely.

[TheWatcher]

64. "there is always a chance of another major down turn, but right that is looking pretty unlikely."

Definitely bookmarking this. :rofl:

WOW.

[NJmaverick]

67. I took your challenge and googled your name and the stock market

your posts from Feb and March 2009 said it all. You were cheering market failure and predicting the end of the world. So I think it's safe to say you know NOTHING about the Markets or the Economy.

[zipplewrath]

66. On Citi yes

I'm not sure they'll see the same returns on AIG, or on the toxic assets. Some of them are VERY toxic.

[girl gone mad]

88. But to get that payout from Citi, we had to let them get out of paying $40 Billion in taxes.

That's what bugs me about threads like this and Rachel Maddow's declaration that the bailout was a success because we're "making money" off of it. It's complete bullshit accounting that 100% ignores reality.

[JackRiddler]

96. Citigroup got out of $40 billion in taxes? Minor details, surely!

Can you link? I missed that financial atrocity, with so many in progress!

The biggest winner with its competitors eliminated and with its executives in charge of the Treasury, the economic team and the Fed, GOLDMAN SACHS "paid back" the TARP, discreetly got $13 billion from the bailout of AIG's bad casino bets (plus unknown billions funneled through other AIG recipients), and declared a whopping $12 billion quarterly profit! Hooray!

These essential humanitarians without whom the world would go under are now again working to help the market on oil prices.

THANK YOU GOLDMAN SACHS!!!

[JackRiddler]

97. David Brooks just said that, too, so I believe it.

[Skittles]

91. CORRECT

[Gormy Cuss]

48. The fact is the analysis excludes remaining exposure.

That's straight from the article. The 8.5% return on investment is based on a subset only. What happens with the remainder could be very different --it could also be similar but it's not possible to tell from this analysis.

[JackRiddler]

54. Indeed, which means it's entirely a spin product.

I've often had the pleasure of following the LBN daily market thread! Thanks to all who make it!

[goclark]

58. I'll take this for starters

:bounce:

[Gormy Cuss]

68. That's the attitude.

It's not bad news after all -- it's just not yet time to declare it a full blown success.

[JackRiddler]

83. Success at what, exactly? The bailout made the criminal class more powerful

Its "success" was at rescuing the Wall Street banking class (for now) from the self-destruction they themselves engineered by way of defrauding the world. In the process, the government has removed any remaining semblance of accounting rules (suspension of "mark to market"), so that there's actually less regulation than before. Absolutely nothing changes and the banksters can return to doing exactly the same thing again. They will cause the next crash - it's in unleashed capitalism's DNA.

Or in fewer words: What happens when you reward criminals? What happens when you capitulate to extortionists?

Counting the real bailouts - not the accounting tricks now being done with the TARP - eight to twelve trillion dollars have been exposed to rescue the precious banksters (again, that's what FDR called them, because he wasn't afraid to say they were gangsters).

What could this money have done instead?

- Retired all state debt (1.8 trillion dollars)
--allow states to found their own banks with solid asset reserve requirements and traditional lending practices to replace the failed Wall Street system.
--allow states to spend at a deficit, rather than cut services in the middle of a depression
--indirectly pumps that money to the financial sector

- Shored up SOLVENT banks and especially credit unions (let's say a mere half trillion); reward the responsible, not the criminals

- Re-built the country's energy and transport infrastructure from the ground up, for a green future, with millions of good jobs created and even more importantly, possibly avoid the coming environmental catastrophe (a mere 2 trillion).

- Take on the corpses of the Wall Street giants and liquidate them. Cancel any debts they held from any government or foreign entity. Fuck their shareholders. Sell off assets to pay their bondholders so to minimize the chain reaction. But honor none of their derivatives contracts (we didn't make those bets, so fuck them). Insure their depositors, obviously. (Reserve up to 2 trillion dollars to accomplish this.)

- Open criminal investigations against all of their executives. Put Harry Markopolos in charge of the SEC and let him go on a firing orgy. Then hire 10 times as many SEC investigators as before and tell them to nail every mother fucker who engages in financial fraud. Spin off the FBI financial crimes unit and merge it with SEC into the new Corporate Enforcement Agency. (merely a few tens of billions - a bargain!)

So there you go. What we could have had for a bailout, in under 7 trillion dollars. A new green economy, no depression, no state financial crisis, and a new public-private banking sector that does not fly the pirate flag: like Wall Street does by its own ideological definition.

[inna]

84. Excellent post.

[Gormy Cuss]

85. Success at earning net interest on the bailout

That is the measure implied in the article.

You're arguing that shouldn't be the measure, which is a different story.

[JackRiddler]

86. Okay, for a moment let's accept the USG making money on this crooked deal as the measure...

The article clearly states that nothing of the sort has happened, even for the TARP.

When you isolate the cases only of the banks that paid back, and leave out those that didn't, that's not making money. That's more of the kind of accounting the banksters themselves have been using to sell their frauds.

When you isolate the TARP from the cost of the other Treasury and Fed bailouts, that's even more misleading. It's bad enough that so many people think the TARP is the bailout, when in fact it's only a fraction of it.

I mean, I could define my backyard as the entire biosphere except for those parts that are outside my backyard. Then I plant some bushes (and ignore the garbage heap) and voila:

"Earth's Ecology Improving"

[girl gone mad]

87. Okay, but then you should also take..

the news that $50 billion from the TARP fund is going to be funneled into a new program designed to bribe banks to rewrite failing loans. Count that new $50 billion deficit against these supposed gains and we aren't exactly coming out ahead any longer, are we?

And I haven't even mentioned all of the endless subsidies we've given the banks in the form of tax forgiveness, near 0% loans, bond programs, housing credits, sweet mark to market rule changes, and on and on..

[Threedifferentones]

95. Did you even read the article?

It explicitly states the report only took into account some of the firms we bailed out. The other guy is right, this report is basically the federal government employing the deceptive tactics of wall street. Cherry pick your facts, hide what doesn't look good, and make money off all the suckers who think things are great. Until the next crash.

What about the firms not taken into account? What about all those "toxic" assets, mostly bundkes of "junk" loans, that the fed bought? If we look at those as the losses they are, my bet is the Federal Govt is out a lot of money. Of course, the Obama cheerleader crowd won't give reports about those nearly the recs as these "see, if ya look at it a certain way things aren't so bad" stories.

It's been my experience that people who don't actually assert any logic of their own, but just basically say "I know through faith this article is right and your points are wrong," are not really interested in having a fact based discussion.

[Demeter]

39. It Is Ignorance, Jack

If you want to meet the people paying attention, visit Stock Market Watch in LBN forum daily. We aren't serving koolaid over there.

[NJmaverick]

42. Putting facts ahead of agenda is not ignorance

[JackRiddler]

53. Failing to advance any facts at all may indicate it, however.

[TheWatcher]

65. Indeed it is not.

Putting agenda AND ignorance ahead of facts, however, seems to be your main M.O.

[Demeter]

71. Everyone Is Entitled to An Opinon

but facts are obstinate little things. They really don't care what your agenda is.

[Iowa]

60. Well said JackRiddler. You speak the truth.

[girl gone mad]

74. I'd like just one of the shills here..

to explain where all that money came from.

I love how they expect people to believe that these insolvent banks just suddenly became profitable out of the blue and everything is now wonderful and money is just growing on trees down on Wall St. As if there haven't been any consequences and that double digit employment and the precipitous decline in lending and the ongoing defaults and bankruptcies don't matter. Let's just extend and pretend and wish away reality. Nobody look at the Fed's balance sheet. Fannie and Freddie who? AIG what? LaLaLaLa!! I can't heaar youuuu!!!

[Skittles]

92. it shows how easy propaganda works

and not just on ignorant repukes

[sendero]

93. Don't bother..

... these idiots don't want to know, it is all simply beyond their ken.

[JackRiddler]

98. It's not so much about "these idiots"

There's usually an audience.

[Hannah Bell]

3. bullshit number.

"Firms such as Citigroup , which still has common shares held by the U.S. Treasury Department, and rivals that have made partial redemptions were excluded from the analysis"

[Name removed]

5. Deleted message

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

[NJmaverick]

6. Considering the rise in the stock prices of Citigroup, excluding those numbers

made things look worse, not better.

[ClarkUSA]

7. No, it isn't.

One can't count banks that have made partial redemptions in this calcualtion. However, a news report last week said that the government's share in Citigroup would net ~ $8 billion if it was sold right now. All bank shares have rebounded since their historic lows, so if anything, taxpayers stand to make a bundle once all is said and done.

[NJmaverick]

9. You're right

[Hannah Bell]

12. if i get to choose the data to include, i can make the numbers say anything.

Under TARP, the U.S. Treasury made total investments of $245 billion in fiscal 2009, which was initially projected to cost $76 billion to the taxpayers.

However, the Treasury has now projected a profit after it has already received $14 billion through just interest and dividends.

With these two repayments, the Treasury revealed that TARP repayments have now reached $181 billion, well ahead of last fall's repayment projections for 2010.

http://www.rttnews.com/Content/BreakingNews.aspx?Node=B1&Id=1259683%20&Category=Breaking%20News


I read that as *still in the hole".

[ClarkUSA]

18. I repeat, one cannot include banks that have made partial redemptions in the number.

That's simple accounting. There's no sleight of hand here. Given that the stock market is surging and close to 11,000 today and no doubt will continue to remain bullish in the foreseeable future, any shares that are still in the government portfolio will net enough billions to give taxpayers a very healthy return on investment when all is said and done.

[NJmaverick]

20. You read it wrong, your report explains that repayments are far greater than expected

[Hannah Bell]

22. i read it right, still in the hole.

[NJmaverick]

No, you're wrong

Just because all loans still have payments to be made and the government still has stock to sell does not me you can say "they are in the hole".

[Hannah Bell]

41. spin, spin, spin.

[berni_mccoy]

13. Unbelievably and over-the-top negative... you can't be happy for anything the admin does right.

Endlessly hating Pres. Obama.

[Hannah Bell]

14. people who make it personal do so because they have no other defense against the facts.

[NJmaverick]

17. The FACTS were presented to you and you deliberately ignored them

favoring terms like "bullshit" with out explanation or "they have no other defense against the facts" when ironically you avoided facts like a vampire avoids sunlight.

[berni_mccoy]

19. Yep, they play the Rovian trick of accusing others of exactly what they do.

[Hannah Bell]

57. ironic.

[defendandprotect]

25. What would it have cost these companies to raise this money on open market -- 26%/29% . . .???

PLUS DAILY COMPOUNDING . . . ??

We rescued their asses once again!!

And they are corrupt companies -- !!!

No one "hates Obama" except in the puerile mind!!

[NJmaverick]

26. Why do you want the government to act like loan sharks?

"No one "hates Obama" except in the puerile mind!!"

Clearly you have not heard of the teabagger movement:eyes:

[defendandprotect]

30. We are permitting credit card companies to act like "loan sharks" for decades ...!!!

Meanwhile, there is no way these companies could have raised these amounts or any

terms - leave along the terms they got from government.

Luckily "big government" bailed their asses out!!

The T-baggers are not regular DU posters -- who you are accusing of "hating Obama."

[ClarkUSA]

38. Two wrongs don't make a right. n/t

[defendandprotect]

44. You're saying it was wrong to give welfare to corporations . . . I agree . . .

The first wrong, is the right wing Congress permitting credit card companies

to act like "loan sharks."

The second wrong, was bailing out corrupt corporations --- and the third wrong

was permitting them to pay bonuses.

Welfare for the rich -- free enterprise for the poor!!

We need to reestablish usury laws --

[ClarkUSA]

51. I agree w/NJ Maverick. Also, welfare recipients do not have to pay back loans with interest...

... so your analogies fall short.

[OnlinePoker]

59. It's not welfare if they're paying it back...it's a loan.

Sometimes with interest back, sometimes not.

[defendandprotect]

77. Baloney - It's a "loan" if it comes from banks, it's "welfare" if it comes from taxpayers. . .!!

Keep in mind we can't even yet get the all the info on what happened to the

money and how much the FED actually lent out -- or at what terms.

We do know that some of the banks took the money at very limited interest and

put it into Treasury securities and sit back and collect 3.5% and more for nothing!!

See Bernie Sanders on that one --

[girl gone mad]

75. TARP was but a miniscule portion of taxpayer welfare given to the banks.

Any serious accounting must include monies given through TALF, TGLP, CAP, TIP, CPFF, AMLF, MMIFF, Homebuyer credits, etc., etc.

You can bet your ass that the banks used the money from some of these 0% welfare programs to pay their way out of TARP ASAP because TARP was the only bailout with any kind of strings, however lax and ineffective they may have been. Paying out of TARP makes for a good show, too, as you can see from this thread. Facts be damned, some suckers still really want to believe that this was all a good idea.

[defendandprotect]

78. Sen. Bernie Sanders a week or so ago . . . related that the banks

took in this money at 1/4% interest -- who knows exactly? -- and then bought

Treasury notes -- 3.5% and 4%+ interest -- so they're collecting 3.25% and more

on our money for doing nothing but being corrupt!!

I posted something on that last week --

And, thank you for all the info you've contributed!!

:)

[SOS]

100. Imagine if we could get this deal

Borrow one billion from the Fed at 0.75%
Buy ten year bonds that pay 3.8%
Get paid $38 million a year.
Pay the Fed $7.5 million a year.

Live like a king on the $30.5 million you "earned".
Sweet!

[defendandprotect]

76. Any taxpayer support for capitalism is welfare -- especially for corrupt capitalism . . .

and much of it is that!!

I beg you pardon, but there was a period of time -- maybe even still exists --

when welfare recepients were asked to repay the money they were given after they

got jobs!!

You have a lot to rethink!

[JackRiddler]

32. Sad canard, berni_mccoy. The bailout started with Paulson under Bush and was the product of the

single corporate party.

How do you expect to persuade anyone by making pure bullshit accusations by the way?

[stubtoe]

4. Who would unrec this? This is great news!

[NJmaverick]

8. People who don't like it when good things happen in this country

[elocs]

10. A better question would be why are you watching the thread so closely for UnRecs?

:shrug:

[Name removed]

11. Deleted message

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

[ClarkUSA]

21. Who's "they"? n/t

[defendandprotect]

27. Wages stagnant . . . someone was reporting the other day on Hartmann, I think,

that Repugs were making a big show of fact that Federal salaries show average $70,000 salary

while salaries for those in private industry are $40,000.

Think that was the way it was stated -- but anyone else who heard the show, please correct if

wrong!!!

Anyway, the Repug was making a big todo over this when Hartmann related that INCREASES FOR

INFLATION/COLA EFFECT FEDERAL GOVERNMENT SALARIES -- but not salaries in private sector!

In other words, the $40,000 private company average salary should be $70,000.

And, as I understand it, if GOP hadn't been gimmicking the Social Security inflationary figures,

those checks would also pretty much be doubled!!

[rfranklin]

15. These figures are meaningless...the banks are insolvent...

and that is what will do us in. Unless we pay attention to reigning in these banks, rather than trying to revive them, we are doomed. Take a look at this analysis--

Between September, 2008, and March 2009, the Fed backstopped the entire US banking system—but it still wasn’t enough. The losses were too great, the holes in the balance sheets too big.

So on April 2, 2009, a key FASB rule was suspended: Specifically, rule 157 was suspended, related to the marking of assets to market value—the so-called “mark to market” rule.

Essentially, the mark-to-market rule means marking an asset to the value it can fetch in the open market at the date of the accounting period. If I own a share of XYZ stock which I purchased at $100, but today it’s quoted at $60, I mark it on my books at today’s market price—$60—not at the purchase price—$100. The reason is obvious: By marking the asset to market value, I’m giving a realistic picture of the financial shape of my company or bank.

However, ever since April 2, 2009, when the FASB rules were suspended, the American banking system has been floating on nothing by air. By suspending rule 157, none of the banks have had to admit that they’re insolvent. With the suspension of mark-to-market, accounting rules are now basically mark-to-make-believe.

http://www.nakedcapitalism.com/

Take a look at the rest of the article. It tells how the banks are basically trading stocks back and forth to pump up their assets. The author describes it as "musical chair trading" which looks great...until the music stops.

[NJmaverick]

16. That doesn't address what is being discussed in this OP

[defendandprotect]

29. Is it an OP or PR . . . that's the question . . . !!

[defendandprotect]

23. And what would the interest be at 26% or 29% . . . plus compounding????

Capitalism got another tremendous break from the American taxpayer --

we should OWN these companies!!

[NJmaverick]

24. Are you suggesting the government should have been in the load sharking business?

[defendandprotect]

28. You're saying credit card companies are "loan sharks" cause that's what they charge . . .???

What I am saying is that we OWN these companies -- that they couldn't have gotten these

funds from any other place. Not those amounts and not those terms --

And they couldn't have afforded the prevailing rates!

It was a giveaway, from which many of them paid obscene bonuses!!

Capitalism is crap -- we should admit it and move on to Democratic Socialism . . .

Capitalism is a corrupt system intended to benefit the few and enslave the masses --

[NJmaverick]

33. Credit card rates are a poor basis of comparison as they practically are a legal form of loan

sharking. Better to compare it to the going rate for business loans, mortgages and car loans.

[Lorien]

90. Are you defending corporate pillaging AGAIN?

Seriously; is there any questionable practice by a megacorp that you WON'T cheer loudly for??

[socialist_n_TN]

46. DEFINITELY agree that we should have...................

OWNED these companies. I even called my rep and spoke to one of his economic aides right after Obama was elected and suggested this with at least ONE of these banks that we were bailing out. Make a REAL Bank of America and make DIRECT loans to the public. Compete with the damn commercial banks and see what happens. I even suggested putting in a 10 year sunset clause if Congress wanted to sell the bank back to private ownership. Of course, nothing happened.

You know the right LOVES to make noise about how bad government service is, but have you ever noticed they don't ever want to have government COMPETE with the private sector? Why is that? If the govt. programs are so bad, wouldn't the private sector compete very well in the service part?

[Lorien]

89. I was thinking the same thing; that's what the CC companies charge

the banksters got off easy-again. And how much did they pay THEMSELVES for taking OUR cash?

[DCBob]

35. Would be great to dig up the old comments from the geniuses who insisted the bailouts would fail..

and we would never see a dime paid back. Idiots.

[Democat]

37. They will post here soon enough...

Just wait. It's all a scam and nothing will ever change their mind.

[ClarkUSA]

40. Yes. Some of them have already been piping up...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=259428&mesg_id=259430

[AngryAmish]

45. HEy! I was one of those idiots!

I also insisted that taking an equity position in the banks was a bad idea. Oops!

Lesson for everyone involved: Never, ever put me in charge of anything.



So, c'mon everyone who agreed with me - I was wrong. Can anyone else admit that?

[DCBob]

47. WOW!! You are the very first to admit it!! Kudos!

You are no longer an "idiot"!!

:headbang: :fistbump: :applause: :toast:

[AngryAmish]

49. Thank you. But I will keep the "idiot" title, thankyouverymuch

It was well earned on this topic.

[DCBob]

50. HA!

:hi:

[JackRiddler]

55. Capitulating to the financial extortionists was and remains a very bad idea.

[girl gone mad]

73. Way to completely miss the real and valid criticism..

of unfettered Wall Street bailouts.

Now, tell me how that super boost in lending we were promised in exchange for the bailouts has materialized.

"Idiots" indeed.

[RUMMYisFROSTED]

61. Minus tax breaks and write offs.

:woohoo:

[girl gone mad]

79. You mean like the 40 Billion tax avoidance scheme Geithner created so Citigroup..

could get out of TARP early?

Yeah, but that still counts as victory for us, right? Even though they paid back the loans early and payed out less than promised using money we would have gotten from their taxes anyhow?

Yea! We won!!

:eyes:

[Romulox]

63. As long as you don't count outstanding liabilities, I own my home free and clear.

:rofl:

[high density]

69. On your bank's balance sheet, your mortgage is considered an asset. NM

[Romulox]

81. It's a DEBT to me, not an asset. Just like my credit card bill ...

(except that a mortgage is secured against the home.)

Not sure if there was any other point to your post! :silly:

[sendero]

94. Yes...

.... and our banks are currently allowed to mark a mortgage that is already in default at full value.

This permission to avoid "marking to market" is at the nexus of banks' claims that their balance sheets are fine. They are not.

Our entire economy is now built on lies but don't tell the deludiniods, they want to believe fairy tales until there is no longer any possibility of not believing.

[JackRiddler]

70. Now why can't you just value it at ten times the market price?

After all, that *could* be its true future value, right?

So unfair.

[girl gone mad]

72. Not this nonsense again.

[TexasObserver]

80. Recommend

[naaman fletcher]

82. A private investor would have received much, much more...

A private investor would have demanded ownership interest of almost half of the banks. That is why the banks ran to the government, so that they could pay the government 8.5% and then pay themselves big bonuses.

[JackRiddler]

99. Let's keep this wonderful news kicked forever!

My guess is the next crash will be held off until after the 2010 election.