Debunking Bailout Myths
Apologists for government bailouts push two main myths:
- That all of the bailout funds have been repaid
- That the bailouts helped the average American
But the official government overseer of the Tarp bailout program – the special inspector general for TARP, Christy L. Romero – has debunked both myths.
Today, Romero wrote the following to Congress:
After 3½ years, the Troubled Asset Relief Program (“TARP”) continues to be an active and significant part of the Government’s response to the financial crisis. It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost).
And earlier this month, Romero stated that the portion of the Tarp funds which were supposed to help homeowners haven’t been disbursed:
A fund to support homeowners in the communities hit hardest by the collapse of the housing bubble has disbursed just 3 percent of its budget and aided only 30,640 homeowners in the two years since its creation, according to a report released on Thursday by a federal watchdog office.
The Hardest Hit Fund, which was created in the spring of 2010, grants money to state housing finance agencies for efforts to help families that are facing foreclosure. It has “experienced significant delay” because of “a lack of comprehensive planning” by the Treasury Department and limited participation by Fannie Mae, Freddie Mac and the large mortgage servicers, said the report by the special inspector general for the Troubled Asset Relief Program.
“Look at the TARP money that goes out to the banks,” said Special Inspector General Christy Romero in an interview with The Huffington Post. “That goes out in a matter of days. This has been two years and only 3 percent of these funds have trickled out to homeowners.”
Indeed, bailing out the big banks hurts – rather than helps – the American economy. See this, this and this. (And it doesn’t take a PhD economist to guess that using bailout funds to buy gold toilet seats and prostitutes is probably not the best way to stimulate the economy as a whole).
The only way to really stimulate the economy would be for the government to give money to the little guy on Main Street – instead of the big boys on Wall Street. And see this.
Yet the big banks continue today to be bailed out through a wide variety of overt and hidden schemes … while the little guy gets nothing.
This is true even though the American people were opposed to the bank bailouts from day one, and continue to oppose them:
As I’ve noted since 2008, Americans are united in their overwhelming disapproval for bailouts to the big banks.
This has remained true right up to today.
As Rassmussen found only last month (as summarized by KXLF news):
Today’s Rasmussen Reports survey finds that most Americans don’t like bailouts for financial institutions.
60% Oppose Financial Bailouts; 74% Say Wall Street Benefited Most
Survey of 1,000 American Adults
• Just 20% think it was a good idea for the government to provide bailout funding to banks and other financial institutions, but 60% say otherwise.
• While many activists try to link the Republican Party and Wall Street, Republicans think the bailouts were a bad idea by an eight-to-one margin.
• Those not affiliated with either major party think they were a bad idea by a four-to-one margin. Democrats are much more evenly divided. Thirty-four percent (34%) of those in the president’s party say the bailouts were a good idea while 42% disagree.
• Overall, 68% believe that most of the bailout money went to the very people who created the nation’s ongoing economic crisis, but 12% disagree and 21% aren’t sure.
[And see this]
As the Washington Post’s Greg Sargent notes, the recent proposal from lobbyists to the American Bankers Association recommending ways to co-opt the Occupy movement accurately stated:
Well-known Wall Street companies stand at the nexus of where OWS protestors and the Tea Party overlap on angered populism. Both the radical left and the radical right are channeling broader frustration about the state of the economy and share a mutual anger over TARP and other perceived bailouts. This combination has the potential to be explosive later in the year when media reports cover the next round of bonuses and contrast it with stories of millions of Americans making do with less this holiday season.
(Except that it is the majority of Americans – not “extremists” on either side of the aisle – that share this anger).
The “Tea Party” movement was centered on the protesting government bailouts of the giant banks, before it was hijacked by the mainstream Republican party, Sarah Palin, Neocons and others. See this, this, this, this and this.
Ron Paul said last month at a GOP debate:
Bailouts came from both parties…. If you have to give money out, you should give it to people losing their mortgages, not to the banks.
And one of the most common sayings of Occupy Wall Street protesters is:
Banks got bailed out. We got sold out
Does Romero’s calcualtions include losses on Fed guarantees like Maiden Lane?
That’s not TARP…That doesn’t count!!!!! Nor anything else the Fed did.
Please stay focused on the tip of this iceberg. Full steam ahead! Nothing to see under the water line.
The only way to really stimulate the economy would be for the government to give money to the little guy on Main Street – instead of the big boys on Wall Street. And see this. George Washington
Amen, amen, amen!
I independently arrived at approximately the same conclusions as Steve Keen’s “A Modern Jubilee” but primarily from ethical considerations of the nature of banking.
But since this country accepts nothing without a great deal of math behind it, Steve Keen’s work is essential. May more folks join him.
Also, Max Keiser was an early proponent of just giving money to the debtors.
Bailouts came from both parties…. If you have to give money out, you should give it to people losing their mortgages, not to the banks. Ron Paul via George Washington
Actually, the bailouts should go to EVERYONE but since the Austrians generally IGNORE the plight of debtors except to urge their efficient liquidation, this is an AMAZING concession by RP.
Turbo Timmie didn’t know….
Daily ticker take off tarp.
Well, you have a choice. He’s either
1) an incompetent clueless idiot
2) a liar for Wall St.
He’s a twofer: A clueless incompetent idiot that works for wall street
We have 2 choices …Abolish the FED and Totalitarianism and restore the U.S. CONSTITUTION and issue our own currency…U.S. BANK NOTES….backed by our own hijacked natural resource revenues or Become a Totalitarian Dictatorship enslaved by the unsustainable debt of the FED who after they bankrupt us, will declare US BROKE…because they robbed us. Then they will offer their fraudulent fix for a quadrillion in fraud they committed such as the VATICAN/ROTHSCHILD GOLD BACKED DOLLAR and a WORLD TAX for the mortgages. That is how they will steal our National Sovereignty. They will fraudulently blame the failure on Capitalism when they in fact, hijacked it long ago. We need a referendum on the 2012 ballot to RESTORE the U.S. CONSTITUTION…issue our own currency…U.S. BANK NOTES and. ABOLISH THE FED or FREEDOM, INDEPENDENCE, PROSPERITY and NATIONAL SOVERIEGNTY will be a thing of the past…..
in other words
shocked i tell you :-)
the feds effective zero interest rate policy
only one man’s story
but doubt i’m alone
has cost me ten’s of thosands of dollars over the past 5 years of retirement
i would have spent every dime in my local economy with local small biz
Wow, once again the interlopers are very afraid the sunnis and shiites will band..oh wait, the “radical left n’ right” will join together and threaten the klepotocracy. Well kids, that’s partly why Ofraud passed NDAA, if things get “explosive” he can roll out the Army. The paranoia from the elites doesn’t make any sense, it hasn’t been clearly stated in the snipet above why they refuse to help homeowners. But, we know the answer to that….
The real victims of the Obma/Fed sellout to the banks are those over 65 and forced to live on retirement savings. Their incomes have been slashed by more than 90%, with more to come.
The reverse mortgage scam is another way the crooks are robbing the elderly. They want all of us to die broke and homeless. Being the current market value stinks the elderly who are living on fixed incomes are desperate because of inflation and are being suckered out of their homes. Time for the U.S. GOVERNMENT to end the stage 4 cancer of socialism and force the crooks to pay back the hundreds of trillions in tax payer money the FED has stolen plus the stolen UTILITY BILL MONEY the crooks have hijacked and stolen from the American people. Then the U.S. GOVERNMENT cut every American citizen a big fat check and issue our own currency …U.S. BANK NOTES…backed by our own hijacked Natural Resource revenues. ABOLISH THE FED and their dollar backed by debt their quadrillion dollar debt fraud that they committed in the names of the American people. Their debt can never be repaid because of a quadrillion in fraud committee by them.
All you have to do is follow the money. Took me a while but no most of the money has never been paid back nor will it. The government does not even count the money Bush handed out as well.
This situation is only going to get worse until we working stiffs get some money or there is a debt jubilee.
Sad when a child gets it and states they should have given the moeny directly to the people they would have paid off their debts and people would have jobs.
Ronald Reagan emphasized,”America is a shining city upon a hill whose beacon light guides freedom-loving people everywhere.”
“can you see by the dawn’s early light,
the twilight’s last gleaming..”
This is what happens when big companies substitute lobbying and campaign donations for business processes and procedures.
As Matt Taibbi said on Eliot Spitzer’s new CurrentTV show, ‘lobbying IS the business model’. So the Overseer’s analysis is consistent with what we’d expect from that so-called business lobbying-as-business model of corrupt politics.
We covered this on the (now defunct) Daily Bail months ago, but we also pointed out that TARP didn’t even do what TARP is credited with having done — namely, save the financial system.
Instead, TARP panicked people who wouldn’t have otherwise been panicked and got taxpayer dollars tangled up in banks’ capital structures (“You can’t ‘nationalize’ Citi-Group — the taxpayer will lose his investment!!”). What saved Goldman Sachs’ hide were things like the Fed CP facility, the Treasury guarantee of money market funds and things like the FDIC guarantee of bank debt (which they had the authority to do with or without the TARP bill, although it was explicitly attached to the bill and put in the convoluted form of the TLGP).
Daily Bail was a GREAT site… sorry to see you go.
Isn’t it a sweet thing for the filthy rich and their whores(aka politicians) that they have the military and police working solely for them? I’d pity their fucking asses if that weren’t the case. And then they have the balls to tell you to support the troops. LMFAO
It’s in the administrations interst to downplay the amount of the bail-outs and whether the loans have been repaid. We hear that G.M.was bailed out, but not Ford, who received vasts amounts of Gov’t loans at close to zero interst rate, the same terms extended to the post office. That we say GM was bailed out and Ford not, is a difference without a distinction. The only thing missing was a wipe-out of equity and a loss to bond holders.
Public financed campaigns would resolve most of this chicanery. Congress has proven to be incompetent,corrupt and incapable to do the right thing. The November 6, 2012 Presidential election should have on the ballot the question to end campaign fund raising and replaced with public campaign financing. A simple yes or no and then it becomes law.
Not a surprise the hardest hit fund has only disbursed 3% of its funds. The score so far: Banks 100, Taxpayers 0.
All ruses. There is no fix for a quadrillion dollars in fraud. They and their massive debt is unsustainable and they are insolvent. The robbery by the FED must stop. They are bankrupting the people for their massive debt fraud that can never be repaid.
They are scurvy. They need mass IV doses of vtamin C and prison. The ongoing bailout and bankrupting of the people by the FED continues unabated via FED MONETARY POLICY and FRAUDCLOSURES…We The People demand clear title to our property and full restitution for our robbery!