April 23, 2009

DON'T BOTHER THEM WITH THE FACTS...:

The Bailout Is a Bargain: Despite tea party protests to the contrary, the Wall Street bailout is costing taxpayers much less than feared – so far. (David Weidner, 4/23/09, WSJ)

Their argument -- that huge tax hikes are coming or have been implemented to pay off bailouts for banking fat cats -- betrays a lack of understanding of the government's approach to solving the financial crisis. When protesters or critics complain about the $10 trillion-plus spent on the Wall Street bailout, you can understand how their estimates of the number of protesters in the streets last week were slightly, well, inflated.

The truth: No one's paying new taxes directly related to the bailout. And most of the government rescue packages offered to the banks have gone untapped or are being repaid. [...]

* Banks have tapped the FDIC's Temporary Liquidity Guarantee Program for $297 billion so far. That's about 20% of the total $1.5 trillion allocated. This is the biggest of the government programs, and banks pay 0.5% to 1% interest for the right to borrow the money depending on how long they keep it.

* During its first month, the Term Asset-Backed Securities Loan Facility, or TALF, has only financed $4.7 billion in consumer debt, far below the $1 trillion allocated. In addition, participation is declining with each new funding cycle.

* The Money Market Guarantee Program, aimed at insuring money-market funds against losses, hasn't spent a dime. It covers up to $3.8 trillion in money-market debt. This program is actually making a small profit, because participating funds are required to pay a fee.

* Other than the stimulus bill, the program with the biggest outlay so far is the Troubled Asset Relief Program, or TARP. More than $570 billion has been committed, but less than $400 billion has actually left the Treasury Department. Like most of these programs, it's unclear how much of this money will be repaid, but most banks say they're either ready or capable of giving it back. If not, they have to pay a 5% annual dividend to the government. In just the first three months of this year, the government has collected $2.52 billion in TARP interest.


...they're on a roll....

Posted by Orrin Judd at April 23, 2009 6:17 PM
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