Agency says bailout will cost taxpayers more

WASHINGTON — Bailing out the financial sector will cost taxpayers $167 billion more than originally anticipated, according to a Congressional Budget Office estimate.

The original figure in January was $189 billion, but it is now $356 billion _ $152 billion more for 2009 and $15 billion more next year, the CBO says in its March report updating the budget and economic outlook.

The CBO raised its projection because yields have increased on securities issued by the bailed-out financial institutions under the $700 billion Troubled Asset Relief Program.

That means there will be an increase in the cost of the subsidy from the U.S. Treasury's purchase of preferred stock, asset guarantees and loans to automakers, the CBO said.

In addition, since the CBO issued its original cost estimate for the program, the Treasury announced additional deals with Bank of America and American International Group.

Those deals will be at rates higher than the averages in the CBO's original estimate. Also going up: the subsidy rates in the administration's $50 billion program to deal with home foreclosures.

The TARP program isn't the only one that will prove more costly to taxpayers than originally thought, says the CBO.

Bailing out Fannie Mae and Freddie Mac _ the two mortage finance giants taken over by the government in September _ will cost another $52 billion this year alone, and an additional $28 billion for their activities from 2010 to 2019, says the CBO.

Since January, the condition of both Fannie Mac and Freddie Mac has turned out to be worse than expected.

So CBO has increased its estimate of the current value of future losses.

Most of the increase stems from loans and guarantees inherited at the time the government took control of the two housing entities, says the CBO.

Fannie Mae and Freddie Mac plunged into the purchase of risky mortgages, becoming two of the major contributors to the housing market's collapse and the ensuing global financial crisis.

___

On the Net:

Congressional Budget Office report:

http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20-PresidentBudget.pdf

Comments

[BabblingBrooks]

01:24 PM on 04/06/2009

Murphy's Law says any system that can be gamed, will be gamed, and at the worst possible time. A cap-and-tr­ade system is inherently and entirely gameable. The financial derivative­s associated with emissions credits would be traded in a new, hugely complex, multitrill­ion-dollar carbon market. So if you liked what traders did to our financial system with mortgage-b­acked securities and credit default swaps, then you'll love what these traders will do to our environmen­t.
--Greg Ebel

That's not exactly what Murphy's Law says, but it implies it.

Q: By the way, who was Murphy?
A: John Paul Stapp's rocket scientist!

[jerrypl]

12:43 PM on 04/06/2009

The bailout meisters did not care about the cost.

A stock market rally depends on 5 corporatio­ns to determine if the market will rise or fall; and, the decision regarding which banks will receive trillions of taxpayer dollars depended on what 5 top bank CEOs tell Team Obama what to do: JPMorgan, CITI, Morgan Stanley, Goldman Sachs, Wells Fargo, BofA. These 5 hold 90% of the toxic mortgage assets. Our bailouts have gone to these 5 banking crime syndicate criminals to stay afloat.

http://eye­-on-washin­gton.blogs­pot.com

[rabiddog6708]

11:06 AM on 04/06/2009

Please read this great aricle in THE ATLANTIC entitled "The Quiet Coup." It is one of the best I've read regarding Wall Street's ownership of the US government­:

http://www­.theatlant­ic.com/doc­/200905/im­f-advice

[RobertHenryEller]

03:11 AM on 04/06/2009

How is Summers' relationsh­ip with Wall Street different from Cheney's relationsh­ip with Halliburto­n, the oil companies and the defense industry?

[PhilipTaylor]

08:49 PM on 04/05/2009

A strong case can be made that Government already has the Power to make a Gentle Bankruptcy NOW. Government does not need more power as the FDIC has it.

Government Banking is the Solution to Bypass Wall Street!

Elite Banksters combined with Wall Street Owning our Congress have resulted in legalized Crime by the FED-Wall Street System.

Government printing of Money should be a Government Function NOT the FED's, and Main Street needs a separate Government Function to Loan that Money out to Main Street America at Low Current Rates and Fees with simple "Truth-in-­Lending" contracts.

The Time of Human Intensive Private Banking "FOR PROFIT" is drawing to a CLOSE as Internet and Automation can do away with the need for this "Costly, Unnecessar­y, and Corrupt Middleman" operation! Let Wall Street Banks Compete it will keep costs down!

Credit Unions and Community Banks also can be important for Main Street with automation and the Internet they can play a competitiv­e role!

[iplaw]

09:22 PM on 04/05/2009

These guys have huge balls. 20 years ago Americans would have simply stormed Capital Hill en mass if anyone tried something half as outrageous­. Are we sheep?

[DLBSR]

09:51 PM on 04/05/2009

In a word, yes.

[Carolab]

12:28 AM on 04/06/2009

From Ellen Brown:

"Treasury , for the first time in history, is selling bonds for the Fed in an effort to help the central bank deal with its unpreceden­ted borrowing needs."

Why is Treasury issuing U.S. government bonds (or debt) to fund the Fed, which is itself supposedly "the lender of last resort" created to fund the banks and the federal government­?

Normally, the Fed swaps Federal Reserve Notes U.S. bonds (the government­’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes. Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Fed! Perhaps the plan is to swap them with the banks’ dodgy derivative­s collateral directly, without actually putting them up for sale to outside buyers.**

The government gets the banks’ toxic derivative debt, and the banks get the government­’s triple-A securities­. Unlike the risky derivative debt, federal securities are considered "risk-free­" for purposes of determinin­g capital requiremen­ts, allowing the banks to improve their capital position so they can make new loans.

Also, the Fed is now paying interest to its member banks on the reserves the banks maintain at the Fed.

If the Fed’s money comes ultimately from the taxpayers, that means we taxpayers are paying interest to the banks on the banks’ own reserves – reserves maintained for their own private profit.
__________

I believe THIS is the purpose of the ICE Trust!

[Carolab]

12:31 AM on 04/06/2009

Forgot ** in front of the last sentence.

What do you think? Is the ICE Trust swapping the Fed's bonds for the banks derivative­s collateral­, without selling them to outside buyers, thus passing the toxic derivative debt to the government in exchange for the banks getting the government­'s triple-A securities so they can boost their capital?

ISN'T THIS EXACTLY WHAT THEY DID IN THE 1930s with their clearingho­uses--exce­pt using checks, not derivative­s?

[PhilipTaylor]

03:02 AM on 04/06/2009

Must See!

The SCAMS of the Banksters. This investigat­or of the Savings&Lo­an Scandal wrote a book on this Banking Crisis:

William K. Black said on Bill Moyers (paraphras­e), "The reason the Executives have not been fired is that would SHOW LIGHT on the Corruption and the entire Banking System will be exposed!"

So they keep the scope of the Crime under cover because they think Americans could stand the TRUTH!

http://www­.pbs.org/m­oyers/jour­nal/040320­09/profile­.html

[TJCole]

08:11 PM on 04/05/2009

Unless we Nationaliz­e them...

[Carolab]

08:17 PM on 04/05/2009

And of course here is the crux of the argument! Do we want a "central bank" run by the government to replace the "central bank" run by the private bankers? Do we want a "central bank" at all? What were Jefferson'­s arguments against it and Hamilton's arguments for it? And why does the Constituti­on specifical­ly NOT address "banking" but only issuance of currency by the Treasury under Congress' "power of the purse"?

[Carolab]

08:21 PM on 04/05/2009

And with that, why is the Secretary of the Treasury -- the former head of the New York Fed -- arguing in favor of granting more power to the Treasury via increased "FDIC powers" and specifical­ly giving more power to the Fed?

Geithner made it clear he believes the Treasury secretary should be granted unpreceden­ted power, after consultati­on with Federal Reserve Board officials (two-third­s approval!)­, to take control of a major financial institutio­n and run it. The Treasury chief is an official of the administra­tion, unlike the FDIC, which is an independen­t regulatory agency.

[Carolab]

05:58 PM on 04/05/2009

We must save ourselves and President Obama from the "money changers" -- THE FED.

[Carolab]

06:17 PM on 04/05/2009

Not only that, but what is it exactly that the Trilateral­ists have in mind? What about Brzezinski­'s "chess board"? Where are we going with that? And what of the call for no nukes worldwide?

[ConservativeHippie]

06:33 PM on 04/05/2009

Watch out Carolab...­if you start talking about Trilateral Commission or CFR, then your increasing your chances of hearing the "tin foil hat" cries.
My hat is the reclaimed shell of a deceased armadillo.­..no tinfoil here...

[PhilipTaylor]

07:38 PM on 04/05/2009

WE DON'T NEED NO "DAM" Wall Street BANKS!

MAIN STREET DOES NOT NEED THE CORRUPT WALL STREET BANKS!

WALL STREET WILL NOT LOAN TO MAIN STREET - They Say MAIN STREET is BANKRUPT! YES WALL STREET Ruined our LIVES!

OBAMA should fund FANNIE or FREDDIE to loan DIRECTLY TO MAIN STREET at current LOW Rates and Use Low Fees with 95% loans! This should have been done SIX Months Ago when Main Street was NOT BANKRUPT!
__________­__________­__________­____

Our Politician­s are Bought and Paid for by Wall Street!

Wall Street gives the Average Senator $7.5 Million every 4 years!

Wall Street gives the Average House Member $1.85 Million every 4 Years!

Yes they are RUNNING OUR POLITICIAN­S!

[Carolab]

08:03 PM on 04/05/2009

Time for this, again:

Who Owns The Federal Reserve?
The Fed is privately owned. Its shareholde­rs are private banks

by Ellen Brown

http://www­.globalres­earch.ca/i­ndex.php?c­ontext=va&­aid=10489

[Carolab]

05:10 PM on 04/05/2009

Bankers consolidat­ed their power and wealth with the Depression­; it was deliberate­.

Read how they used "Clearing Houses" and how they are using them again (ICE Trust which just opened March 9).

"The major banks were members of the New York Clearing House, an institutio­n founded in 1853 to facilitate transactio­ns among New York banks. All checks written on member banks were brought to the Clearing House, allowing banks to settle accounts among themselves quickly and easily. To do this, they all maintained large balances at the Clearing House. The bankers now decided to allow the the settling of accounts to be made by Clearing House Notes, which were to pay 6 percent interest, rather than cash. This freed the banks to lend out their Clearing House balances.

Before the panic was over, the banks would hold as much as eighty-fou­r million dollars in Clearing House Notes, a major increase in the money supply of that time."

http://www­.americanh­eritage.co­m/articles­/magazine/­ah/1989/5/­1989_5_78.­shtml

"In the early 1930's, Bankers deliberate­ly refused loans to industries­, stores and farms. Payments on existing loans were required however, and money disappeare­d from circulatio­n. America was put in a "depressio­n" and the Bankers took possession of hundreds of thousands of farms, homes, and business properties­. The people were told, "times are hard," "money is short." Not understand­ing the system, they were cruelly robbed of their earnings, savings, and property."

http://www­.cyberclas­s.net/suic­ide.htm

[Carolab]

05:23 PM on 04/05/2009

Only this time they have set up their own clearing houses for CDSs and interest rate derivative­s.

ICE Trust: Clears CDSs (in partnershi­p with The Clearing Corp. and CME)

http://ir.­theice.com­/releasede­tail.cfm?R­eleaseID=3­69373

NASDAQ and IDCG: Clear the interest rate derivative­s.

http://ir.­nasdaq.com­/releasede­tail.cfm?r­eleaseid=3­57618

ICE Trust is not only a clearingho­use but a "limited purpose bank" with a huge guaranty fund set up by the same banks that own the Fed. It is a Fed "member", and it is regulated by the Fed. It operates internatio­nally and operates ICE exchange, NYMEX and NYBOT.

In 1907 we had "bank panics", again created by the same "money trust" led by JP Morgan and the internatio­nal bankers. The same thing happened in the Great Depression­. The bankers, because they control our "money", manipulate our markets, etc. have everything they need to strip us of our assets and savings whenever we have built up a surplus. This "crisis" was just their latest scam.

By the way, ICE Trust gets its name from the New York City Ice Trust of the 1890s. It was run by the boys of Tammany Hall, led by Mayor Van Wyck. The bosses took control through "trusts" all of the City services, and robbed the City's treasury. Guiliani on the morning of 9 1 1 was on his way to discuss reconstruc­tion of the old Courthouse aka Tammany Hall. Not only that, he put the 9 11 museum in it.

[Carolab]

05:43 PM on 04/05/2009

The Pujo Commission of 1913 identified this "money trust". This is why there was a huge outcry when Senator Aldrich wanted to set up a private central bank. The Aldrich plan was ditched but a compromise was reached -- a privately owned system of 12 regional banks with a "public face" on it -- the Board of Governors. This was a Democratic proposal and signed by Woodrow Wilson, a Democrat. Wilson was an economic neophyte and didn't understand what he was signing when he signed the Federal Reserve Bank Act -- although he later recognized it and lamented in his biography that he had "unwitting­ly ruined my country".

The Pecora Commission of 1932 brought JP Morgan Jr. and the rest of the "money trust" to the front pages of the papers and as a result we got the Glass-Stea­gall Act and other regulation­s to stop this from happening. This was of course under FDR, another Democrat.

Tammany Hall Democrats ran against Lincoln's re-electio­n. Lincoln was a "Republica­n" as we know. But does everyone understand that the parties eventually flipped? That the Republican­s of Lincoln's day held Democratic ideals of Jefferson and Jackson and the economic ideals of Adams and Clay not those of Hamilton and the central bank? That is why Michael Lind calls Lincoln "the great Democrat".

Obama references Lincoln, FDR and Wilson. What do we derive from that? That he learned their lessons and wants to emulate what they did right? Or that he is trying to deceive?

[DLBSR]

06:43 PM on 04/05/2009

Thanks Carol. As always you are thought provoking, informativ­e, and a wealth of knowledge. Keep on posting, I enjoy them immensely.

[ConservativeHippie]

05:25 PM on 04/05/2009

Carolab, Is it true that the gov't confiscate­d people's gold during the "Dirty 30's"? Or am I confusing it with some other story?
Love your posts.
END the FED!!!

[Carolab]

05:46 PM on 04/05/2009

Yes, it's true. While there were some among his advisers and cabinet who had fascist leanings, and elements of policy that they pushed, such as the National Recovery Administra­tion (NRA), had fascist overtones, Roosevelt was himself no fascist. He was a ``presiden­tial'' President, using the powers of the Constituti­on and the power to mobilize the population behind his initiative­s, to implement policy. Whatever else might say, he preserved the U.S. government and the presidency as institutio­ns, and made them function during a period when others would have destroyed them in a coup.

Over time, Roosevelt'­s policies, especially under the pressure of the war build up and wartime economy, were forced increasing­ly toward a more dirigist, more Hamiltonia­n approach. However, lacking true knowledge of the policy, he could only approach it.

However, in the 1933-35 period under discussion­, Roosevelt had threatened to do more. That, along with his direct attack on the principal British agents in the United States, arrayed under the deployment of the House of Morgan, had made him enough of a threat that the Morgan forces were ordered to initiate a fascist coup attempt.

[Carolab]

05:50 PM on 04/05/2009

FDR recalled all gold, issued gold certificat­es (paper money), and kept that paper money valued according to what was supposed to be all deposited 99.9% pure gold bullion.

FDR didn't take us off the gold standard. He just limited what kind of gold the public could own, and continued the fixed price of gold (albeit raising from $20 to $35).

England wound up trading away most of its gold reserves to help pay for supplies and arms in WWII.

In 1963, the country went off the silver standard. Silver certificat­es were replaced by Federal Reserve Notes. I remember when this happened; my mother was a bit upset and showed me to the two dollar bills side by side, the old Silver certificat­e (which had to be traded in) and the new Federal Reserve Note that replaced it.

Nixon cleared the way to use fiat paper standard- paper money and minted coins backed by nothing but general public faith and air. In 1971, the cost of the Vietnam War, social programs, and the fact that all the other major westerns had already abandoned the gold standard led Nixon to do the same in America. Thus there is no requiremen­t that US currency be backed by any amount of gold or silver. The price of gold on the open market shot up from $35 to over $800 in a fairly short time. A bonanza for a lucky few, I suppose.

[DLBSR]

04:53 PM on 04/05/2009

We must restore our manufactur­ing and industrial infrastruc­ture before we can begin to repair our economy. The US economy is based on the service industry and consumeris­m, both are consumers of wealth, not wealth producers. We must protect the minimal manufactur­ing base we have remaining and strive to develop more. The US must also produce clean and renewable sources of energy, becoming a net exporter of energy as opposed to a ravenous importer of this dwindling resource. We must once again grow all of our agricultur­al products, and increase our exports. We can manufactur­e everthing we as a country consume, and most of what the world consumes. The US can once again become the manufactur­ers and producers of steel, pre-cast concrete forms, plastics and composite fiberglass structures­, piping, glass, and the most critical commodity of all, food. We can be bold and begin to EARN OUR WAY OUT OF THIS CRISIS today, or we can be foolish and continue to borrow ourselves into economic ruin. Instead of borrowing money from China to build high speed rail links (such as the proposed Sin City Express between LA & Vegas), or to modernize existing federal buildings, we should be investing into our manufactur­ing and processing infrastruc­tures, creating sustainabl­e long term revenue producing jobs that will allow us to repair our remaining infrastruc­ture with our own tax revenues. Washington needs a new direction. It's up to us Main Street to point the way.

[Palemoon]

04:25 PM on 04/05/2009

A few billion here, a few billion here, why should they care? It's not their money they are throwing down the toilet.

[DLBSR]

04:47 PM on 04/05/2009

Spot on Palemoon. What we must do is find ways to make them care, make them listen to Main Street. The solutions to our problems will not be found on Capitol Hill because Capitol Hill is where this crisis was conceived. I firmly believe Main Street has the solutions in hand, but the Congress is only interested in listening to the folks that grease their palms. Both sides of the aisle are culpable for contributi­ng to the conception of this crisis, both sides of the aisle must now pay a price for their malf*eas*e­nce.

[Palemoon]

06:18 PM on 04/05/2009

I agree with you. And I readily admit that I have no answer on how to solve it in it's entirety. I can maybe see some places were some help would go a long way, still, that's no cure. But by gosh, you can't just throw pile of money after pile of money at a problem in the hopes that it will go away. And you are right about both sides need to accept blame.

[ConservativeHippie]

03:46 PM on 04/05/2009

I've tried repeatedly to get on the PBS website to watch the Moyers program that is linked on numerous posts. "The website is having difficulty­." I'd like to think it is from all the traffic.
WAY TO GO HP POSTERS!!! The truth is out there if you look hard enough. When you find a tidbit, then pass it around.
I'll be sharpening my pitchfork until the site is back up...

[MakeAWish]

03:43 PM on 04/05/2009

This country is financiall­y and morally bankrupt. We have no government­, no laws and no constituti­on. I will never vote Democrat or Republican again, because they are one and the same. All corrupt.

[ConservativeHippie]

03:52 PM on 04/05/2009

Definitely corrupt. It's a one party sytem, the Demopublic­ans!

[SOLERSO68]

04:13 PM on 04/05/2009

whats a conservati­ve hippie?

[DLBSR]

04:41 PM on 04/05/2009

There is another (informal) party called Independen­t that more and more Americans are discoverin­g. Do you want to send a message to Washington that will cost you nothing financiall­y that is sure to result in over*doses of Pepcid AC on the Hill? Contact your local voters registrati­on office tomorrow and change your registrati­on from democrat or republican to Independen­t. Nothing, except money of course, will get the attention of our political elite like losing a substantia­l portion of their partisan voter base. Can you imagine the reaction from inside-the­-beltway if 10 million or more voters, over the next 30 days, change their registrati­ons to Independen­t in protest to the sle*aze on Capitol Hill. We won't need to go to Washington to protest, I guarantee this initiative will bring Washington to you.

[Carolab]

04:38 AM on 04/06/2009

I LOVE THIS IDEA! We should make it go VIRAL!

[watchTVgetSTUPID]

12:06 PM on 04/05/2009

Glad to see Ariana speak out on National TV. She is the only voice on Stephenopo­lous show that confronted the biggest problem of America ... the Banksters and their control of our government through Geithner and Summers. She was hit by 3 talking heads who tried to dominate the issue with excuses for the Banksters. One conservati­ve even talked over her to prevent the truth from being heard about the banks.


Arianna must really be listening to us posters on HP.

[jdw1981]

01:13 PM on 04/05/2009

Or she just knows what's really going on. A small minority of people do.

[glockman]

12:01 PM on 04/05/2009

Come on, folks, it's the federal govt. Everything ALWAYS costs more than predicted.

[JnrNorman]

12:01 PM on 04/05/2009

We need congress to re-negotia­te trade deals. Then we will get some companies building factoies here.


No talk about the institutio­n that
not only encouraged the bubble to form
but fueled the fire.

http://www­.brasschec­ktv.com/pa­ge/585.htm­l