TARP Earned Taxpayers 8.2% Return

For all the Cronenberg-style chest-flesh-yanking the bank bailout generated, gone almost unnoticed is that the damn thing actually made money.

The government earned a profit of $25.2 billion on a $309 billion investment, according to new data crunched by Bloomberg. That comes out to a sweet return of 8.2%, a very nice ROI indeed.

However, “there are other costs as the government made it possible for the banks to pay back TARP,” the chief investment officer at New York-based Offit Capital Advisors LLC, told Bloomberg. “Those costs can turn out to be larger, and their legacy could last longer.”

Wall Street Bailout Returns 8.2% Profit Beating Treasury Bonds [Bloomberg]

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  1. Nogard13 says:

    Good, I’ll expect my check in the mail soon.

    • DanRydell says:

      You’ll get your share after we pay off the national debt. Oh, no you won’t – it doesn’t work that way.

      I got my share by investing in banks. I wish I had invested more in Ford though.

    • RTWinter says:

      Its called infrastructure, police, fire departments, national defense, public transit, employment insurance (or whatever the american equivalent is, I live in Canada) etc.

    • AnthonyC says:

      The government already created a tax structure that is incapable of funding the programs it is supposed to pay for. First we need to balance the budget, which will require (after economic recovery) either a) raising taxes, or b) cancel *all federal spending* other than the military, medicare, and social security.

  2. Loias supports harsher punishments against corporations says:

    In before the “See? You fear-mongers were just fear-mongering. TARP was good.”

    Also in before the “the trur cost is yet to come. Democrats suck!” comments.

    • nova3930 says:

      Well, I woulda said:

      They’re not counting everything because we’re still pouring $$$ into the black holes that are Fanny Mae and Freddy Mac and politicians suck in general.

      You were close though….

  3. benh999 says:

    wall st took our money! fat cats getting rich off of us! blah blah blah

    • qwickone says:

      Why all the blah blah blah? That’s true. Sure TARP is getting paid back, but there are record bonuses on Wall St this year too. Since most I banks only exist because they were bailed out, then they made that money off money the government lent. So yes, they took our money and are getting rich off of us. BTW, if you actually talk to a lot of people that work on Wall St, the general consensus seems to be that the gov’t is using them as a scapegoat and they didn’t do anything wrong. Also, they seem to forget their respective banks probably wouldn’t exist without the bailout. Why is it the wealthy that are the fastest to complain and forget that they get help too?

      • benh999 says:

        They got loans and paid them back with interest. Our financial sector is still intact and the federal government made a nice return. This should be win-win.

        • YOXIM says:

          Should be but really isn’t. As the article above says, there are other costs that haven’t been figured in yet that may very well outweigh any profits that were made. Also, the reason TARP got paid back so quickly is because the government allowed banks to take 0% interest loans which they used to pay back TARP and get themselves off the strict oversight hook. Essentially, all they did was copy a bunch of figures from one sheet of paper to another. The money was shuffled from one pocket into the other, and other such metaphors : )

      • Gulliver says:

        Do you know that every person who took out a student loan, and FHA backed mortgage and an SBA loan would all qualify as people who were “bailed out” as well? The fact is without TARP, the financial system in this country would have imploded. I for one am for a socialized banking system with one bank only and strict regulations. Canada did not have a banking crisis precisely because of very few banks with very strict over sight.

  4. tedyc03 says:

    Hey, never let the facts get in the way of fear mongering! At least, that’s what the Republicans claim their motto is…

  5. RxDude says:

    Wait, wasn’t there an article linked last week that said TARP was going to cost $50 billion?

    • Gulliver says:

      This article is about the bank portion of TARP. Tarp was close to 800 million, this article is talking about $309 billion of it

    • AnthonyC says:

      Actually, I think it said “less than $50 billion.”

      As in, no one is quite sure yet how much TARP will cost overall. Also, costing -$25B is less than costing +$50B. And, yeah, this is specific to one portion of TARP.

  6. diasdiem says:

    So what will happen quicker, the Republicans stop trying to blame the cost of TARP on the Obama administration and taking credit, or the Democrats stop blaming the cost of TARP on the Bush administration and taking credit?

  7. Nighthawke says:

    Well, OK.. Give credit where it goes. At least the GAO will be tickled to see a few bills go back into the system. This is about the first time in my life that I’ve seen a gov’t project actually turn a profit.

    • DanRydell says:

      The post office used to be profitable.

      • Nighthawke says:

        They bungled too many opportunities to make $$$ when the economy was turned upside down by the advent of the internet. The USPS so rightly deserves to suffer for their stupidity, but not at the cost of us.

      • Griking says:

        I thought that the post office wasn’t allowed to turn a profit

      • MrEvil says:

        The department of the interior also was making a profit off of the Helium fields in the Texas Panhandle… However, because government owning a profit-making enterprise is socialist they gave it away to whomever gave a congressman a big enough bribe.

  8. AngryK9 says:

    Great. And when everybody’s taxes jump at the end of the year because the Bush tax cuts are (most probably) going to be allowed to expire, they can use that 8.2% to offset the increase and keep everybody’s taxes at the current…

    …oh wait, what was I thinking.

    • xxmichaelxx says:

      Do you believe that the 8.2% is roughly equal to the amount of $$ that will be lost in revue if the tax cuts are extended? If so, please stop voting and please don’t breed — you’re lowering the curve for the rest of us.

    • Brink006 says:

      First, those tax cuts were meant to be permanent. Second, you can blame fiscal conservatives and improperly applied ideas like supply-side economics if all tax cuts are to expire. I would love to see a survey on how many people actually understand marginal tax rates, as the current TAX FEVER would suggest that there’s a significant portion of the population who are completely ignorant of the process.

      • craptastico says:

        those tax cuts weren’t meant to be permanant. they were meant to be leverage to cause people to vote Republican to maintain them, and they have been used as just that.

      • Daemon Xar says:

        They absolutely were not intended to be permanent. They had to sunset in ten years because it’s the only way the Rs could ram them through Congress using the dreaded “reconciliation procedure” they spent months whining about this time around. Reconcilition bills can’t increase the deficit for more than ten years and the Rs weren’t willing to cut spending to pay for the tax cuts, so the cuts absolutely were intended to expire this year.

    • Daemon Xar says:

      I think you mean that the Bush tax hikes are kicking in . . .

  9. ShruggingGalt says:

    8.2% now until Bank of America goes bankrupt in the next 12 months. I saw that they’re (regulators, lawyers) moving on getting Countrywide (now BofA) to buy back $47b in bad mortgage loans. And Fannie/Freddie and the Fed Reserve of NY are among the plaintiffs.

    So we’ll see another bailout to bail this out because BofA is just too big to fail.

  10. JayPhat says:

    So, the money taken out of TARP and given to GM and Chrysler was offset by a HUGE return from the banks that netted an 8% profit? If you read the article you’ll find out that this was just the money used on the banks and insurance companies THAT PAID BACK MONEY. Only about 2/3’s of the institutions loaned money paid it back, but those 2/3’s paid it back with the interest.

  11. danmac says:

    I’m still convinced that we would have seen a higher rate of return if we’d just invested the $309 billion into lottery tickets.

  12. Blueskylaw says:

    We will never know the “true” cost of the entire program because it was so mind-boggingly huge. That said, I seriously doubt that we will make money on this let alone break even because the numbers will be politically spun nine ways till Sunday.

    The Treasury initially invested $204.9bn in 707 banking institutions under CPP and, to date, received repayments totaling $147.5bn. There are currently $55.1bn remaining in outstanding CPP capital investment in 617 banks.

    Of those 707 banks, 98 failed to make the most recent TARP dividends payments — due in May — and 64 repaid the Treasury in full. Full repayments totaled $13bn. The Treasury’s average return on investment (ROI) for the banks that fully repaid their investment was 10.3%, with six investments yielding more than 20%. First ULB Corp. yielded the highest ROI at 29% while SBIB yielded the lowest ROI at 2.9%.

    In this case Treasury is claiming to have made money, but only on banks that paid the funds back so they are in essence cherry picking information. We wont even go into Fannie Mae and Freddie Mac where alot of people are saying that the hundreds of billions of Dollars will never be recouped.

    • JayPhat says:

      Exactly my point. They are pointing out that they mademoney on the funds that have been paid back. But nearly 1/3 is still ouistanding and may never be recovered, example GM. The government would have to sell ALL of it’s shares at $140/share to see a full return of all money given to GM.

  13. cacchip says:

    Also have to wonder if they “refinanced” the TARP loans via 0% borrowing from the FED ala GM.

  14. nova3930 says:

    “Banks benefited from dozens of other programs instituted by the Federal Reserve and the U.S. Treasury Department during the worst financial crisis since the Great Depression, from the purchase of mortgage-backed securities to the bailout of home- lending giants Fannie Mae and Freddie Mac. The suppression of interest rates at close to zero for most of the last two years has also boosted banks’ income, enabling them to borrow money at almost no cost and lend at higher rates.

    Those low rates drove down returns on instruments used by American savers. U.S. Treasury 30-year bonds yielded an average of 4.1 percent from Oct. 20, 2008, through yesterday, according to Bloomberg data. “

    Oh yay! We “made” money by what amounts to an indirect tax. I’m certainly glad that I got to pay an indirect tax to help prop up Wall Street and buy some more political power for the thugs in federal gov’t….

    • xxmichaelxx says:

      You also got to avoid another Great Depression. Congrats!

      • nova3930 says:

        Maybe. Maybe not. The “we stopped a catastrophe” argument is not nearly as cut and dried as many would make it out to be.

        What is cut and dried is that the politicians and wall street sucked more $$$ out of our pockets to put a bandaid on the sucking chest wound that they created…

  15. jake.valentine says:

    Judging from the article just last week stating we would “only” lose 50 billion dollars with TARP, I would wait until tomorrow/next week when there will be yet another article with a totally different conclusion. Our government has us and our unborn children burdened with oppresive debt now. When you see these rare puff pieces that attempt to make it look not so bad, it gets heavy play among the more liberal commentors who ignore every other shred of evidence that the country is headed in the wrong direction. We are trillions (with a T people) in debt now. The alleged “change” from 2008 only meant that we accelerated our movement in the wrong direction rather than any real manuevering onto a new course. Any excitement about this article is akin to the gambler celebrating over winning $100 at the blackjack table while ignoring the thousands he lost playing other games.

    • TexasP says:

      The 8.2% profit is certainly unsustainable, given the impossibility of correctly pricing the bad assets assumed by us, yet equally bogus is the statement that we have burdened our children with oppressive debt, or that we are headed in the wrong direction. Mainstream conservatives have gone so far into their alternate-reality universe that I don’t think any evidence to the contrary will make a dent.

      The US needs to come to grips with long-term medical expenditures, yet US conservatives oppose with tooth and fang any rational attempt to address the issue. Sarah Palin is the face of the neo-Know-Nothing party, and woe-to-us if she or any otherTeabagger comes into real power.

      • jake.valentine says:

        I was giving your comment serious consideration right up until you had to use the childish variant of Bagger. This is used by the Left to minimize the opinion of anybody who has the audacity to disagree with somebody such as yourself. Of course, change your Bagger choice with a variety of defamatory words that somebody would use to describe a different demographic and that would be just horrible! Hypocrites………

    • ARP says:

      So let me get this straight, when Bush took power in 2001, the debt was around $5.6T. When he left office it was around $10.7T (even more if you count his budget was used in the Obama administration until the Stimulus was passed) for a total of around $5.1T, and you seemed to have no issue with that (or you did, but said and did absolutely nothing about it).

      • jake.valentine says:

        “The alleged “change” from 2008 only meant that we accelerated our movement in the wrong direction rather than any real manuevering onto a new course.”

        I did not think we were on the correct course under GW either. Please read and think before commenting based on your emotions and pre-determined beliefs.

  16. peebozi says:

    Thankfully, there are accepted accounting standards that were used and they are indisputable!…i mean, “in dispute”, sorry.

  17. smartmuffin says:

    And all it cost us was our freedom!

    It has never been about “will this make money or not,” from the very beginning, the debate was “does the government have the authority to do this? what precedent does it set? is it a good idea?” The fact that it earned an 8.2% profit does not answer any of those questions. And uh, 8.2% isn’t THAT nice. A decent hedge fund manager would be expected to do a lot better, and he doesn’t have the option to write the rules in his own favor.

  18. frak says:

    What is the cost of the moral hazard that was created? If I ran a bank I’d skirt every rule, cook every book, and lend to anyone. Why not? The government will bail me out and while my scam runs, I’ll make hundreds of millions as CEO.

  19. bishophicks says:

    So the banks are now on sound financial footing, new regulations have been put in place to prevent a similar meltdown from happening again, bank recordkeeping is crystal clear and there are no other financial catastrophes looming on the horizon, credit card rates are coming down, the people that committed fraud and helped fuel the boom are going to jail and bank executives are humbled by the experience and promise to stick to plain vanilla banking for awhile and leave the financial engineering and “innovation” to less reputable firms. Awesome.


  20. thebaron says:

    I really doubt their math, since they did not take in account the interest on the trillions we already owe and this added to the debt pot as well.

  21. Erik Hughes says:

    How much of it was paid back by zero percent interest loans taken directly from the fed?

  22. yzerman says:

    Good use it to pay back China!

  23. Elcheecho says:

    i don’t think anyone on this site can take that article seriously. this is a joke, yes?

  24. RogueWarrior65 says:

    Return for whom? The government? The one that can print money? I’ll bet I could get a better return if I invested the $5000 myself.

  25. mga says:

    Item #6, of this article http://www.huffingtonpost.com/2010/10/20/nine-stories-the-media-is_n_769620.html suggest that TARP isn’t making any money, and is going to cost money… I too find it too early to claim that its making a 8.2% return. Nothing in politics is that simple.

  26. msky says:

    BULL! What about the cost of the bailout and the intangible cost of ruining the economy and markets for a few years now?

  27. zantafio says:

    this was of course all over Fox News…

  28. DragonThermo says:

    I smell Enron-style cooking of the books here. After all, the American Taxpayer is still (ostensibly) the majority owner of Government Motors (was: GM) and other corporations. Sell our stake in GM and see what our return is! Wait for all the other TARP loans to be repaid and loans defaulted and see what our ROI is. We have hundreds of billions, if not trillions, of taxpayer and fiat (willed into existance by the Bureau of E

  29. DragonThermo says:

    I smell Enron-style cooking of the books here. After all, the American Taxpayer is still (ostensibly) the majority owner of Government Motors (was: GM) and other corporations. Sell our stake in GM and see what our return is! Wait for all the other TARP loans to be repaid and loans defaulted and see what our ROI is. We have hundreds of billions, if not trillions, of taxpayer and fiat (willed into existence by Obama’s Treasury Czar) still out there waiting to be repaid.

    This is an example of loaning money to two friends. One paid back the loan with a little interest, the other has not. You can’t claim you made a positive ROI, while hoping/assuming the second loan is repaid with interest and does not default.

    But then again, with interest rates kept artificially low, TARP recipients have a motivation to pay back the expensive TARP loan with cheap Treasury loans. We’re still on the hook and building a debt faster than ever before.

    Oh, and nevermind the fact that the Democrats say they have plans to spend the money received to pay back the TARP loans, thus keeping us deep deep deep in debt.

    Any TARP loans paid off must be used to pay off the debt that Obama is burdening us with. Any ROI on TARP loans need to be used to balance out the defaulted TARP loans, to reduce the debt burden on current and future taxpayers.

  30. Jimmy37 says:

    Bloomberg, huh? These numbers from the same types that sold us AAA-rated mortgage bonds consisting of toxic debt? These numbers from the same types that gave us Enron and WorldComm?

    Ask them what assumptions they’ve made and what numbers ARE NOT INCLUED! If you believe these numbers, I’ve got a bridge to sell you.