TARP To Cost The U.S. Nearly Double The Initial Estimates: CBO

The government's bailout of banks may cost U.S. taxpayers nearly two times more than originally estimated, according to the Congressional Budget Office.

The Troubled Asset Released Program, better known as TARP, will cost the federal government $34 billion, the CBO reported on its director's blog. That's $15 billion higher than the agency's previous estimate in March. The increase in the estimate is mostly due to a drop in the market value of the government's investments in American International Group and General Motors.

In addition to the TARP loan, the Federal Reserve provided financial institutions with loans totaling more than $1 trillion in December 2008, at the height of the credit crisis, according to Bloomberg.

Federal officials engineered TARP in October 2008, arguing that giving banks billions of dollars would help them withstand the credit crunch and stymie financial disaster. Critics allege that the money, which was supposed to spur lending to American businesses, never made it to Main Street. More recently, the contrast between the government bailouts bankers received and ordinary Americans' lingering jobs and housing woes has become a rallying cry for Occupy Wall Street.

In fact, many of the banks went back to making the same high-risk bets that got them into trouble in the first place, according to a September study from the University of Michigan. Banks treated the money and the limited guidelines that came with it as an implicit reassurance that the government would help the them in the event of future disaster.

Though Treasury Secretary Timothy Geithner told a watchdog panel in June 2010 that the banks had repaid 75 percent of the bailout money they received, there's still billions outstanding. Financial institutions owe the government $18 billion, while AIG still needs to repay $50 billion, according to a CBO infografic.

While the CBO boosted its estimate, it's guess is still lower than that of other agencies. The Office Of Management and Budget estimates that the bailout will cost the federal government $53 billion, according to the CBO blog.

 

Comments

[scythus]

04:09 PM on 12/24/2011

So they got money to cover themselves after they screwed us all over and now they're trying to do it again...it's almost like if you do something wrong and escape without penalty there is no reason to not repeat the action, if you get a reward (like millions of $$) it seems to actually ENCOURAGE a repeat of this behavior.......I may be on to something here

[pwarnock80]

04:03 PM on 12/22/2011

TARP is the worst piece of legislation written in the 21st century. It transferred wealth from the middle class straight to the bankers pockets. All these supposed conservatives that voted for TARP like Orrin Hatch need to go this election cycle. Nothings shows who your masters are like a vote for TARP and bank bailouts.

[Kristul]

12:55 PM on 12/31/2011

Senator Orrin Hatch has been transferring wealth and imposing his liberal policies (when he says he's conservative) on the people for to long, and he needs to be DETHRONED- 36 years in the senate. http://www.dethronehatch.com/
Depressions, recessions, etc.- the natural fluctuations of the market ought not to be tampered with by bureaucrats who can only coerce when they do anything. Recessions cleanse out misallocations of resources and direct them to the more efficient producers. We don't want Senator Hatch screwing us any longer.

[mudshark12]

01:40 AM on 12/22/2011

90% of Americans told our Senators and Congressmen NOT to bail out the banksters. What did they do: TARP. Now they find out it's going to cost us TWICE as much ? ? ?

2011 has been the year of the endless bummer. 2012 had better be a vast improvement as we can't take much more of this B.S!

[AskandThink]

10:44 PM on 12/21/2011

Please this is news? Did anyone NOT see this was coming, would come?
ONLY nearly doubled…?
I would count my lucky stars but I know the “count” isn’t over and won’t be.
But then again I know….

“Figures can lie and liars can figure!”

Does anyone truly expect anyone to believe this….(insert your own curse word!) ????
Pure poppycock!

http://en.wikipedia.org/wiki/World_Bank
Robert B. Zoellick 2007–present United States Bank executive with Goldman Sachs, Deputy Secretary of State and US Trade Representative

[Solvend]

12:23 PM on 12/20/2011

The money given to bail them out should have been given to consumers to pay off debts. Banks still would have received the capital and consumers would have some confidence to purchase more things and spur growth.

The 16 Trillion handed out secretly by the Fed could have paid off ALL consumer debt for every US citizen (student loans, mortgage, credit cards, auto loans) and given them $8,000 a piece in fun money.... talk about stimulus effect.

instead we haded it to those friends who are connected to officials at the Fed..

[RonFromNM]

07:42 PM on 12/20/2011

The money "given" to them should never have occurred, but your proposal is just as bad. This country has to stop spending money we don't have! Too big too fail is too big to exist.

That $16T the Fed handed out is going to come due in the form of very high interest rates and inflation. It takes a few years, but we're in for some really rough economic times that will make these look good.

[kamact]

08:53 PM on 12/19/2011

Tim Geithner is a financial terrorist who should be thrown in jail for life,...

[scythus]

04:13 PM on 12/24/2011

You forgot to mention hard labor I'm sure a spot could be found on the chain gang for him somewhere not to mention a hammer to break some rocks with....

[Don Glenn]

08:16 PM on 12/19/2011

Why did we bail out the banks? So they could repossess our houses? If we had let them fail we could have kept our house's by default maybe?

[Jimm Milenski]

07:56 PM on 12/19/2011

Goodness, what a surprize!

[Unclebuggies]

04:27 PM on 12/19/2011

Time for a fact check, HuffPo. Your statement that AIG "still needs to repay $50 billion" to the Treasury is inaccurate. AIG has no outstanding debt to the Treasury, nor does the CBO say otherwise. Any future money the Treasury recovers will be through the sale of its AIG stock, either to the public or back to AIG. The amount recovered will depend on the price of AIG's stock at the time of sale.

[Norm]

08:53 PM on 12/19/2011

Thanks. Accuracy is important.

[msbeal]

02:55 PM on 12/19/2011

What people don't realize is the Mom-Pop grocery store model of capitalism ISN'T the capitalism we see today.

All these conservatives espousing the virtues of free-markets when we're swimming in shark-filled waters, and the sharks are the monopolies and oligopolies.

[MisterCharles]

11:53 AM on 12/19/2011

Let's not forget that TARP was passed under George Bush's Admin. I am certain that more will come to the light when the full magnitude of this bail out is realized.

[redonthehead]

06:52 AM on 12/19/2011

Every once in a while it would be great if HP told the whole story.

Nearly every bank, thrift and brokerage firm have repaid their TARP loans in full with interest. The two holdouts are GM and AIG. General Motors did their IPO roughly a year ago. Shortly after the company announced how they were essentially paying off the unions with cash and benefits and now the company is down roughly 35% from the IPO price. Interesting that GM keeps losing value while it's workers are still the highest paid in the industry.

AIG is a mess.

[msbeal]

02:51 PM on 12/19/2011

You are correct except we now also own a monster inventory of bad loans from F & F.

[authorized-user]

06:25 PM on 12/19/2011

All TARP did was saddle the taxpayers with a bag of Sh*t.

[ZeraLee]

04:38 AM on 12/19/2011

1) Hold the stock until the price rises.
2) Vote the shares to drive responsible policies.

3) Expect the republicans to cry socialism.

[Vapula]

01:08 AM on 12/19/2011

Great. How much more taxpayer funds are the Republicans going to give to the Wall Street thugs? We know they are lining up to take money from everyone else to give to the 1% but just handing over the keys to the Treasury is so much quicker.

[TrippLite]

11:40 AM on 12/20/2011

I hate to break it to you but Obama as Senator supported and voted for TARP.

http://www.realclearpolitics.com/video/2009/12/08/obama_supporting_tarp_in_2008_step_up_and_do_whats_right.html

At the time Obama was elected only $350 Billion was dispersed. He demanded use of the second $350 Billion as President.

http://abcnews.go.com/Politics/Economy/story?id=6638175&page=1#.TvC4qtTOzIY

[Buckus]

12:26 AM on 12/19/2011

Let's be clear about how most of the banks "Repaid" the TARP money: They took out low-interest loans from a different Fed program and "paid back" the TARP money. Like using your Bank of America Visa to pay off your Bank of America Mastercard. Hey, the Mastercard's paid off, right?

[Vapula]

01:09 AM on 12/19/2011

And why was it low interest when the rest of us have to pay over 20% on Mastercard?

[marinemomof3]

05:35 AM on 12/19/2011

Selective capitalism !

[msbeal]

02:52 PM on 12/19/2011

Because you ain't CitiBank. :)

[redonthehead]

06:53 AM on 12/19/2011

Not true. Most of the banks did secondary stock offerings to raise the necessary cash to repay TARP. You don't know what you're talking about

[Buckus]

11:40 AM on 12/19/2011

I said "Most," I didn't say "All," and I stand by my assertion that many banks chose to take low-interest loans from the FED to repay the TARP money from the FED.