US to make profits from bailout: US Treasury

[busydude]

http://www.latimes.com/business/la-fi-bailout-profit-20120414,0,3027317.story

WASHINGTON — The Obama administration probably will make a profit on all the bailout money spent to prop up banks and other companies, as well as struggling homeowners, devastated by the Great Recession, according to the latest federal projections.

Over the next 10 years, the taxpayer-funded bailouts could produce as much as $163 billion in profits, in a best-case scenario, from repayments, stock sales, dividends and interest paid by banking and insurance firms, auto companies and mortgage finance companies.

That's a stark turnaround from predictions of hundreds of billions in losses in the immediate aftermath of the unprecedented aid, starting at the end of the George W. Bush administration.

The projections were sketched out in a Treasury report released Friday that highlighted the positive effect of the response to the financial crisis by the Bush and the Obama administrations.

Senior Treasury officials said they wanted to dispel misperceptions that the controversial bailouts, including the $700-billion Troubled Asset Relief Program, have been ineffective and costly.

"Collectively, these programs — carried out by both a Republican and a Democratic administration — were effective in preventing the collapse of the financial system, in restarting economic growth and in restoring access to credit and capital," Timothy Massad, Treasury's assistant secretary for financial stability, wrote in a blog post Friday.

However, any profits from the overall bailout efforts will likely turn on the ability of Fannie Mae and Freddie Mac, the housing finance giants seized by the government in 2008 as they neared collapse, to recover.

The document can be accessed here.. http://www.treasury.gov/resource-ce...ocuments/20120413_FinancialCrisisResponse.pdf

I found this pretty interesting.. and wonder if this will be taken as a positive sign for the administration for the upcoming elections.

 

[masteryoda34]

I bet I could make some profits if I had the ability to print money too.

 

[rudder]

I bet I could make some profits if I had the ability to print money too.

And the ability to erase debts with the swipe of a pen also helps profits.

 

[Jaskalas]

$29 Trillion: A Detailed Look at the Fed’s Bail-out by Funding Facility and Recipient.

Tarp was pennies on the dollar.

 

[woodie1]

And the ability to erase debts with the swipe of a pen also helps profits.

Yep. Wasn't it around 400K GM bonds that became worthless in the bankruptcy proceedings?
You just know those bondholders are happy.

 

[jagec]

Over the next 10 years, the taxpayer-funded bailouts could produce as much as $163 billion in profits, in a best-case scenario

Yeah, and buying a lottery ticket could produce a 500,000,000% ROI in a best-case scenario.

 

[trenchfoot]

http://www.latimes.com/business/la-fi-bailout-profit-20120414,0,3027317.story



The document can be accessed here.. http://www.treasury.gov/resource-ce...ocuments/20120413_FinancialCrisisResponse.pdf

I found this pretty interesting.. and wonder if this will be taken as a positive sign for the administration for the upcoming elections.

Well, depends if you're a Dem or a Repub. And from the looks of things, just for the fact that Obama was equally involved as Bush was makes anything good related to the bailouts a pailfull of puke as far as the Repubs are concerned. But funny thing is, when the bailouts are railed on by the Repubs, it's all on Obama and Bush is mysteriously missing from the conversation.

So funny.

 

[Fenixgoon]

Yeah, and buying a lottery ticket could produce a 500,000,000% ROI in a best-case scenario.

lol yep. a lot can happen in 10 years.


what kills me is so many people operate on projections/predictions, and dare i say rather poor ones. until it becomes a reality, you haven't really done anything yet (made a profit on bailout loans, had a budget surplus, etc)

 

[Dulanic]

Dat der just unpossible!

 

[Exterous]

what kills me is so many people operate on projections/predictions, and dare i say rather poor ones. until it becomes a reality, you haven't really done anything yet (made a profit on bailout loans, had a budget surplus, etc)

Agreed. They will almost always use the ones that support whatever adgenda they are trying to promote and hide their assumptions in the small print. You can skew future predictions in so many ways its not even funny

 

[xj0hnx]

But funny thing is, when the bailouts are railed on by the Repubs, it's all on Obama and Bush is mysteriously missing from the conversation.

So funny.

Bullshit, Bush was highly criticized for his part in it, but the fact remains that Bush hasn't been president in years, and Obama didn't take the country in another direction, so yes, he gets the current blame.

 

[Fern]

Recently we had a thread about this where it was noted that the loans were accounted for as expenditures in the budget.

That means repayments are accounted for as revenue.

Which means are budget deficits are worse than they appear due to artificially inflated revenue numbers.

Fern

 

[Jhhnn]

Well, depends if you're a Dem or a Repub. And from the looks of things, just for the fact that Obama was equally involved as Bush was makes anything good related to the bailouts a pailfull of puke as far as the Repubs are concerned. But funny thing is, when the bailouts are railed on by the Repubs, it's all on Obama and Bush is mysteriously missing from the conversation.

So funny.

Even better is Repubs' denial as to the reasons the crisis occurred in the first place, which was implementation of their own faith based free market ideology as policy. Now that the crisis has abated, they want to keep on keepin' on as if nothing had gone wrong at all.

Dunno that the bailout will ever really show a profit in conventional terms, but it or something else, like nationalization of sinking banks was obviously necessary, otherwise it would have been 1932 all over again. In that sense, it was a highly profitable undertaking.

 

[classy]

I am not a huge Obama supporter, but some things have worked and worked well under him.

 

[Anarchist420]

The tax payers not only lost a huge amount of money (as others have pointed out), the market was also distorted because bad firms were bailed out.

It's a crying shame that we missed out on all the good that could've been if only the government hadn't intervened.

 

[thraashman]

The tax payers not only lost a huge amount of money (as others have pointed out), the market was also distorted because bad firms were bailed out.

It's a crying shame that we missed out on all the good that could've been if only the government hadn't intervened.

Like complete financial collapse and worldwide massive depression. Sounds like a fantastic idea. Like something Ron Paul would want to base his economic policy on. In other words, a very bad idea.

 

[Ausm]

And the ability to erase debts with the swipe of a pen also helps profits.

Nice spin...but for the grand prize, guess what party introduced the money printing fiasco we have now....

 

[a777pilot]

Let me get this right.

The Federal government spends hundreds of billions of dollars they don't have to bail out companies and unions.....mostly unions.

They then say they will make 160+ billion in profits from that "investment".

Two quick items that bother me:

1. None of that money, not the original spending or the "profit" is ever being repaid.

2. The government is in the red for this current fiscal year by over 1.6 trillion dollars.


....and these are the people you want in charge of this country's economy for four more years? What is wrong with you? On drugs or something?

 

[Thump553]

Yep. Wasn't it around 400K GM bonds that became worthless in the bankruptcy proceedings?
You just know those bondholders are happy.

Those would have been worthless in a Chapter 7 liquidation proceedings anyway (what Romney and the GOP wanted)-along with lots of other debts and jobs, and plenty of other companies would have been dragged down as well.

In short, your venom is misplaced.

 

[Anarchist420]

Like complete financial collapse and worldwide massive depression.

It would've been a very short depression and unemployment would be well less than half of what it is now. You don't seem to understand that after an unsustainable artificial boom, a little short term pain is then necessary for long term prosperity. The fiscal train we're on is sooner going to run off the rail and into the pit of no return. How do you think the debt is going to be repaid? Do you honestly think that the income tax is going to pay back the debt? Do you honestly think that Obamney would distribute the debt among the States based upon number of electoral votes? Do you think Obamney would sell the government's National Parks System and/or its weapons? Do you think creditors will continue to loan to the government at rates this low forever?

 

[trenchfoot]

Bullshit, Bush was highly criticized for his part in it, but the fact remains that Bush hasn't been president in years, and Obama didn't take the country in another direction, so yes, he gets the current blame.

So therein lies the quirk in the Repub mindset. It doesn't matter who sits at the desk at the moment. If both Bush and Obama endorsed the bailouts they should always be mentioned in the same breath whenever the topic is brought up. Currently, the bailouts are being targeted at Obama and Obama only, just like I mentioned. The Repubs want to have their cake and eat it too where by your logic, Obama is now soley responsible for the bailouts while very conveniently leaving Bush totally out of the picture when in fact it was Bush's idea to begin with.

Both Bush and Obama are joined at the hip as far as the bailouts are concerned. The only difference I can see is that Bush wanted to help his big business buddies while Obama also included the working stiff folks like me in how the bailouts were handled.

 

[xj0hnx]

So therein lies the quirk in the Repub mindset. It doesn't matter who sits at the desk at the moment. If both Bush and Obama endorsed the bailouts they should always be mentioned in the same breath whenever the topic is brought up. Currently, the bailouts are being targeted at Obama and Obama only, just like I mentioned.

No, they shouldn't. Obama has had years to reverse, or change course, but he has not, so it's his now, Bush is long gone, get over it.

 

[sactoking]

I'm interested to see what sorts of accounting trickerations they're using to show "profit" because I'm under the impression that the taxpayers have already taken losses on AIG, GM, and the other big financial recipients. Given that they were the largest companies "aided" it would strain credulity to believe that the smaller recipients will somehow materialize profits in such magnitude as to not only wipe out the large company losses but also to accumulate hundreds of billions in profits.

 

[a777pilot]

Profits are irrelevant to the federal government.

All monies spent on these bailouts is gone. Even if is paid back with a profit, the Congress as already said it will NOT be use to retire debt.

 

[Fern]

I'm interested to see what sorts of accounting trickerations they're using to show "profit" because I'm under the impression that the taxpayers have already taken losses on AIG, GM, and the other big financial recipients. Given that they were the largest companies "aided" it would strain credulity to believe that the smaller recipients will somehow materialize profits in such magnitude as to not only wipe out the large company losses but also to accumulate hundreds of billions in profits.

I quickly looked at the Treas data and I didn't see a basis for such profit claims.

Moreover, the thing is based on future projections that assume the economy and housing markets will return. I.e., it's estimates based on a rosy outlook.

And it looks to me that this includes far more than just TARP.

I.e., the thing isn't to be taken seriously at this point. It's just a 'what if'.

Fern