Treasury Dept. estimates taxpayers to lose $89 Billion on bailouts. Banks even bigger.

[Dover]

That's about a third of the $250 Billion loss projected in earlier estimates, but it's hardly cause for celebration, considering "the legacy that these bailouts have created" stated David Weidner.

The supposedly too-big-to-fail banks, for instance, have grown even bigger since the crisis, with just four banks now controlling 56% of U.S. bank assets and 39% of deposits. And for all the money thrown at the housing market, the federal government's main mortgage-assistance program has helped only 148,000 of the 4 million homeowners who need a hand....we deserve more for our $89 billion. -- David Weidner, Marketwatch.com

In other words, instead of being held accountable, the system has been preserved.

"What a depressing circus," said Paul Barrett. The debate on Democratic Sen. Christopher Dodd's financial reform bill has begun, and it's already clear that legislators will do nothing to erect "a real buffer against the sort of risk-taking that fueled our recent crisis." -- Paul Barrett, Bloomberg Business Week.

No strong rules to force banks to raise capital and liquidity levels as insurance against disaster.

[xchrom]

1. Such a deal. Nt

[msongs]

2. that's nothing compared to what the war lovers are getting nt

[Nite Owl]

4. So true

and the billions to the health care industry.
Can't pass unemployment bill though, and we must cut Social Security.

[Nite Owl]

3. Hard to believe that after all

we have gone through with the banking crash that they would even try to pass this bill.

[MannyGoldstein]

5. Weren't we told on DU - repeatedly - that we're *making* money on the bailouts?

So was Obama evil, or stupid, in putting Summers and Geithner in charge of the economy?

I guess that, functionally, it doesn't matter which. We're screwn again - the economy is going down again, but now Obama and his crew have protected the bankers and the rich so only the rest of us will be ultra-fucked.

[JVS]

9. Yeah, where is that stuff?

[metapunditedgy]

6. I don't believe that number. n/t

[girl gone mad]

7. The $89 Billion number isn't accurate.

Much of TARP has been "repaid" through other backdoor government bailout funds and tax forgiveness schemes. This allows the banks to issue a warm and fuzzy press release and for Treasury to continue "extend and pretend" in a somewhat less transparent fashion.

[Dover]

8. What's your source for that info? I haven't seen much of anything

that accounts for TARP money, repaid or not. Do you have some links that explain what you've described? That would be helpful.

------

Here's another excerpted source which questions the Treasury's meme:


A major factor missing from Treasury’s math is the vast transfer of wealth to banks from investors resulting from the Fed’s near-zero interest-rate policy.

This number is not easy to calculate, but it is enormous.

The Fed’s rock-bottom interest-rate policy bestows huge benefits on banks because it allows them to earn fat profits on the spread between what they pay for their deposits and what they reap on their loans.

These margins are especially rich on credit cards, given their current average rate of 14 percent and up.

The losers in this equation are savers and investors, especially people on fixed incomes ...

Then there are the losses suffered by the Federal Deposit Insurance
Corporation when it has to take over faltering institutions.

The estimated cost to its insurance fund is $6.65 billion for the 43 banks that have failed this year. The fund is financed by bank fees.

Treasury’s recent figures also don’t reflect hits that may result from loss-sharing arrangements the F.D.I.C. set up with healthy banks to persuade them to take on the assets of failing ones.

How much the government might have to swallow as part of that program is unknowable now,

but Christopher Whalen, editor of the Institutional Risk Analyst, said he expects such losses to hit $400 billion when all is said and done.


http://www.economywatch.com/in-the-news/bank-bailouts-n...