Tags: TARP | bailout | GM | loss

Final Taxpayer Price Tag for the TARP Bailout: $40 Billion

By    |   Thursday, 01 May 2014 10:14 AM

The price tag for the massive taxpayer bailout of Wall Street and the nation following the 2008 financial meltdown has been whittled down to approximately $40 billion, according to a report from the Special Inspector General for the Troubled Asset Relief Program (TARP) cited by CNNMoney.

But the report warns that the bailout — of big Wall Street banks, of the housing market and of automakers — may have left some of the parties involving thinking they can get federal help again the next time the bottom falls out.

Special Inspector General Christy Romero wrote that bailed out companies may now conclude that, in the future, they can once again "play by their own set of rules without regard for consequences."

Editor's Note: These 38 Dates Are Key to Bagging $313,038

The remaining $40 billion of red ink is the bottom line for the TARP that was set up in the wake of the 2008 crisis.

The bulk of this amount is from losses to just two companies that were bailed out: General Motors and AIG. While $50 billion went to GM, $11.2 billion is considered written off or lost, and of the $68 billion that went to insurance giant AIG, $13.5 billion is considered gone and not recoverable.

The Treasury Department spent $7.8 billion of the TARP monies helping taxpayers with underwater mortgages get cheaper loans. But $1.2 billion has been lost on loan modifications for borrowers who later defaulted anyway.

The outcome might have been worse. The government spent about $475 billion in the TARP bailout, most of which has been paid back. So the $40 billion that is being written off amounts to a loss of less than 10 percent on the original outlays.

The task force President Obama appointed to manage GM's bailout and bankruptcy in 2009 was unaware of the faulty ignition switches installed for years in the automaker's cars, and that are now costing hundreds of millions in damages for deaths and other liabilities, Bloomberg reported.

If the task force had known, it would have considered setting aside even more money for GM, according to Bloomberg's sources.

The price tag for future government bailouts in the United States theoretically could be even steeper than the 2008 version was, according to a new report from the Federal Housing Finance Agency, The Wall Street Journal reported.

The report concludes that Fannie Mae and Freddie Mac alone could require another $190 billion in government support under the worst-case economic scenario laid out in new stress tests.

The stress tests, required by the Dodd-Frank financial reform, are designed to forecast potential losses in a "severely adverse" economic environment. Under that most severe forecast, home prices would plunge 25 percent during nine quarters, a downturn worse than the one experienced in 2007 and 2008, according to The Journal.

Editor's Note: These 38 Dates Are Key to Bagging $313,038


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The price tag for the massive taxpayer bailout of Wall Street and the nation following the 2008 financial meltdown has been whittled down to approximately $40 billion, according to a report from the Special Inspector General for the Troubled Asset Relief Program (TARP) cited by CNNMoney.
TARP, bailout, GM, loss
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2014-14-01
Thursday, 01 May 2014 10:14 AM
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