TARP Bailout to Cost Less Than Once Anticipated

[Uzybone]

http://www.nytimes.com/2010/10/01/business/01tarp.html?hp


WASHINGTON — Even as voters rage and candidates put up ads against government bailouts, the reviled mother of them all — the $700 billion lifeline to banks, insurance and auto companies — will expire after Sunday at a fraction of that cost and could conceivably earn taxpayers a profit.
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A final accounting of the government’s full range of interventions in the economy, including the bailouts of mortgage-finance giants Fannie Mae and Freddie Mac, is years off and will likely remain controversial and potentially costly.

But the once-unthinkable possibility that the $700 billion Troubled Asset Relief Program could end up costing far less, or nothing, became more likely on Thursday with the news that the government had negotiated a plan with the American International Group to begin repaying taxpayers.

[jmowreader]

1. That's not the point...

Sometimes I get the feeling the teabaggers get nostalgic for the lifestyle portrayed in The Waltons, like other people dream about living in Mayberry or like the Cleavers. And this lifestyle would have been yours if TARP hadn't passed.

There's something else the teabaggers do not want to admit, or they don't actually know: it was the Gramm-Leach-Bliley Act and the Commodity Futures Modernization Act, both of which were written by Republicans, that caused us to have to pass TARP. Guys, there's a reason we keep bankers on a real short leash: they absolutely cannot be trusted to act in a responsible manner if they're allowed to roam free. Bankers caused Great Depression I (largely unregulated margin trading, and using all that money over in the commercial side of the house to cover margin calls) and Great Depression II (derivatives, which "eliminated risk" from mortgage lending {I know there was still risk, especially since the loans being issued were designed to be ultrarisky--it's just that by selling the mortgages as MBS and CDO, the risk moved from the bank to the downstream investors}, enabled bankers to make loans they knew couldn't be repaid), so if you really want to fix this problem the first thing you're going to have to do is put the banks on about a foot-long lead made out of the anchor chain off the USS Oriskany.