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To all those of you who keep crying about banks getting bailed out, please read. I've tried telling you people that the "bailout" was a huge money making venture for the government. Also, this profit will quadruple if the government starts selling their 34% stake in Citigroup at the current share prices.
Report: US makes $4 billion from bailout banks - Yahoo! Finance (http://finance.yahoo.com/news/Report-US-makes-4-billion-apf-1832981578.html?x=0&.v=2 - broken link)
When the entire original $700 billion is repaid, (which will never happen) perhaps we can begin to assess if we made a profit or not. Until then we are in the hole. To say it was a money maker is ludicrous propaganda.
You really have to "net" it against the total bailout and how much we may lose.
Until all the money is returned and/or accounted for I don't think they should be yelling "profit" quite so soon.
That GM money is gone and AIG, Fannie, Freddie aren't doing too well.
This is the equivalent of when you gamble. You spend $50 and make $5 back on that $50. In the meantime you've spent $200 and lost that.
With the amount this administration and Congress has spent, $4B back is pocket change. And how much do you want to bet its not even going where it should be going?
You really have to "net" it against the total bailout and how much we may lose.
Until all the money is returned and/or accounted for I don't think they should be yelling "profit" quite so soon.
That GM money is gone and AIG, Fannie, Freddie aren't doing too well.
Word.
I remember right after the first go-round of bailouts when Wall Street cheered that some bailout banks were in the black and stocks soared...then stocks bled off once those same rocket scientists realized that those banks did not necessarily have a operating profit minus bailout money AND they still had serious debt to deal with.
The Big Picture...can be a doozy. Especially since Citigroup and BofA can wipe this "profit" out. Let's just celebrate anyway!
Still, all the profits taxpayers have won could be wiped out by two deeply troubled institutions.
Both Citigroup and Bank of America are holding mortgages and other loans once worth billions of dollars but whose revised values are uncertain. If they prove "toxic" because they cannot attract buyers, they could leave large holes in the banks' balance sheets.
Neither bank is ready to repay its bailout money soon, even though their stock prices have surged in the past month, leaving the government sitting on paper profits of about $18 billion between them.
I happen to agree about the automakers. The money given to GM and Chrystler is more than likely gone forever, and never should have been given in the first place. The was a true bailout, and was as much about the UAW union as it was the automakers. As bad as it would have been for the workers, and those of other related companies such as auto parts manufacturers, these two incompetent companies should have been allowed to fail.
The bailout loans given to banks was really more like a very expensive loan program, and I believe most institutions who were given TARP funds will eventually repay it, and will continue to pay the government dividends on it in the meantime. Of course, some will fail and the investments in those banks will be lost, but overall, the TARP program will be very profitable for the government. The article I linked above states $4 billion in profits from the big banks and another $35 million from smaller banks. I believe that the governments 34% stake in Citi is currently worth around $12 or $13 billion more than the original $45 billion that Citi took, at it's current share price. Also, Bank Of America, who took $45 billion in TARP funds, pays the government over $700 million per quarter in prefered share dividends related to the TARP investment. At this rate, the taxpayer should hope Bank Of America NEVER pays back their TARP. Here is their press release from the end of Q2 announcing the government dividend payment, which they also paid in April (Q1), and will pay again in Sept (Q3).
Fannie Mae and Freddie Mac are pigs of a different oink, because they are both government sponsored entities to begin with. As such, they were already subject to tighter government control and regulation, which is why these are the two companies that led us into this mess to begin with. These two companies were already under the type of strict government oversight that the Obama administration now would like to extend to the rest of the financial world. How did that work out for Fannie and Freddie?
Last edited by treasurekidd; 08-31-2009 at 07:06 PM..
With the amount this administration and Congress has spent, $4B back is pocket change
MGT04, the $4 billion is profit, and is in ADDITION to the TARP funds that the banks have repaid (Goldman Sachs, JP Morgan Chase, US Bancorp, Morgan Stanley, Capitol One, BB&T Corp, Northern Trust, American Express, Bank Of New York, State Street Bank and many smaller banks have paid back all of the TARP funds they borrowed, totalling over $68 billion). The $4 billion is profit.
Quote:
Neither bank is ready to repay its bailout money soon
You are right about Bank Of America, and Wells Fargo as well. Citigroup will not be "paying back" anything, because they have already converted their TARP debt into equity. In other words, they've traded their debt to the government for stock, and now the gov't owns 34% of Citi, and it's investment ($45 billion originally) is now worth somewhere around $55 to $60 billion at it's current share price. This is not hard stuff folks.
Last edited by treasurekidd; 08-31-2009 at 07:35 PM..
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