WP:TARP expected to cost U.S. only $25 billion, CBO says

[Burgold]

http://www.washingtonpost.com/wp-dyn...=moreheadlines

By Lori Montgomery
Washington Post Staff Writer
Monday, November 29, 2010; 8:30 PM

The Troubled Asset Relief Program, which was widely reviled as a $700 billion bailout for Wall Street titans, is now expected to cost the federal government a mere $25 billion - the equivalent of less than six months of emergency jobless benefits.

A new report released Monday by the nonpartisan Congressional Budget Office found that the cost of the program, known as TARP, has plummeted since its passage in October 2008, when policymakers thought that the world stood on the brink of an economic meltdown.

"Clearly, it was not apparent when the TARP was created two years ago that the cost would turn out to be this low," the CBO report says. "The transactions envisioned and ultimately undertaken through the TARP engendered substantial financial risk for the federal government."

However, "because the financial system stabilized and then improved, the amount of funds used by the TARP was well below the $700 billion initially authorized, and the outcomes of most transactions made through TARP were favorable for the federal government."

[Major Harris]

i know what it's saying, but the average joe in me has a hard time digesting the phrase "a mere 25 billion."

[Burgold]

pocket change... mere pocket change. Btw Harris, you got a billion or two I could borrow for this week's game? They raised the price on beer down at Fed Ex again.

I agree. OTOH it's pretty good news relative to the debt. Actually, both this and the Big Three auto bailout seemed to have a happy ending. Hopefully, these are symptoms that the U.S. is getting back on track.

[AsburySkinsFan]

2 and a half months in Iraq at the height of the war...no biggie.

Problem is that the bast majority of conservatives will not believe these numbers because they have been told that TARP is supposed to have cost hundreds of billions of dollars and brought our nation to economic ruin. Many will scoff at the very idea of the "non-partisan CBO".

Let the dance begin.

[Henry]

If this is true then GWB deserves a lot of praise for spearheading such an effective policy at such a (relatively) cheap price.

[DRSmith]

So about 75 dollars per person

[DRSmith]

If this is true then GWB deserves a lot of praise for spearheading such an effective policy at such a (relatively) cheap price.

If it is good people remember as Bush's

It was needed it was too bad it was needed.

[chipwhich]

It's funny how TARP supporters come in and out of the woodwork as numbers look better or worse.

Talk about flip flopping politicians.

[Burgold]

If it is good people remember as Bush's

It was needed it was too bad it was needed.

Henry tends to side slightly more with the Dems. I agree though. If this really works out this way and we see that the financials have stabalized. Bush, Bernanke, and Pelosi deserve much more credit than I originally thought.

[Henry]

Yeah, this has nothing to do with my personal politics. I never voted for Bush and I have said many times I thought he was a lousy President.

However, if TARP really ended up costing us only $25 billion, I would have to re-evaluate the level of lousiness I attribute to him.

[DRSmith]

Henry tends to side slightly more with the Dems. I agree though. If this really works out this way and we see that the financials have stabalized. Bush, Bernanke, and Pelosi deserve much more credit than I originally thought.

Bernake and others who made financial policies that led to this mess should be slapped.

Something should have been done to keep the credit markets from getting so hot.

People at times need rules to protect them from others and themselves.

Investements should be kept from day to day banking.

Mortgages should be held by the issuer to ensure good loans made,

People should have to pay at least a 5 percent down payment and banks should have to keep a certain percentage of cash liquid.

Taxes should have been going up under Bush as federal spending was increasing.

[Fergasun]

Gosh, I would hope so since TARP really didn't do what it was supposed to do. The goal of TARP was to remove the bad debt from the banking system. That didn't happen. We just gave the banks some really cheap loans so they could make a bit more money. Then, when the Democrats got control of Congress and tightened up executive compensation the banks bailed out on the program because they really didn't need it (this was after Ben Bernanke and Paulson stressed how much the banking system *needed assistance* in October 2008).

There is even some empirical evidence that the TARP itself caused the stress to the financial system, that Paulson and Bernanke (and Geithner, I think it is not well known that Geithner at the NYFRB was involved in all of this as well... hence he got the Treasury job and even him cheating his taxes wasn't going to stop it...) didn't give it enough time to evaluate the impact of Lehman failing. 2 days after Lehman went down they started talking up the fear of the economy and there were whispers of a depression, and Bernanke publicly saying things like, "If we don't act there won't be an economy anymore."

It's hard to convince me that their reaction didn't add to the panic. I think that calm action by the Federal Reserve in the face of a crisis is the best policy. However, I don't know all of the political pressure that Bernanke and Paulson... they forgot that our government doesn't exist to prop up the banks. AIG was *bankrupt* not insolvent, and its continued existence irks me. Everyone at the time crowed about main street insurance policies (which were protected by the state regulators), when they were really fearful of the impact to bank counterparties (which could've been protected by the Federal Reserve anyway). The banks actually got somewhat of a double bailout.

Don't even get me started on the auto industry or the myriad of other bull**** programs.

[mjah]

Well, it would be completely fitting if the best domestic policy decision W made was the one he described as going against his instincts.

[AsburySkinsFan]

Well, it would be completely fitting if the best domestic policy decision W made was the one he described as going against his instincts.

OMGness! How true, how true!

[BRAVEONAWARPATH]

If this is true then GWB deserves a lot of praise for spearheading such an effective policy at such a (relatively) cheap price.

You're right Henry.

Gotta give credit where credits due.