Remember just a few months ago when the right was whining that the bailouts would cost us $700 billion or more, that the government was talking over these companies to further the reach of socialism, that we would never see a penny of that money. Well, it just aint so. We have been repaid most of the money, we are getting the gubmint out of the companies as fast as possible and the taxpayers will not end up spending anywhere near as much as originally feared. Plus of course we averted the economic disaster Bush engineered.

Yeah, I know the following is just a figment of the imagination of the liberal left wing press. Some excerpts from the WSJ.

http://online.wsj.com/article/SB10001424052702304846504575177950029886696.html?KEYWORDS=tarp

Light at the End of the Bailout Tunnel

As momentum grows at companies that looked like zombies just a few months ago to repay taxpayers for lifelines they got during the financial crisis, the projected cost of the bailout is shrinking to just a fraction of previous estimates.

Treasury officials are increasingly optimistic that even American International Group Inc. (NYSE: AIG - News) could be on its own within a year, with officials discussing ways to extricate the government from its 80% stake in the insurer, according to people familiar with the situation. AIG is on track to repay its loan to the Fed through asset sales that will raise $51 billion.

The discussions come as the Treasury is planning to sell its $32 billion stake in Citigroup Inc. (NYSE: C - News) and General Motors Corp. moves toward repaying its $6.7 billion government investment and embarking on an initial public offering this summer. Both companies could be free of government strings sometime this year.

We haven't been repaid most of the money. Although we have been repaid some. The $89billion is a Treasury Dept estimate. I didn't think the figure looked correct when I started thinking about all the different programs that constitute the "Bailout" and all the funds included in each. When I read the article in it's entirety I noticed you omitted a few choice details.

"For example, the US government still is providing crucial support for financial and housing markets. And there is one glaring exception to the encouraging trend of wards of the state getting back on their feet: Housing giants Fannie Mae and Freddie Mac, with $125.9 billion in direct injections from the government, are expected to rely on federal coffers for years. They have an unlimited US credit line.

According to CBO, losses related to the investment portfolios of Fannie Mae and Freddie Mac are projected to total $370 billion through 2020, though the figure will fluctuate depending on the health of the housing market. The treasury’s $89 billion estimate for the total bailout cost doesn’t incorporate CBO’s projected losses at Fannie and Freddie because, for budgeting purposes, the Obama administration technically considers them private entities. Taxpayers are potentially on the hook for losses at Fannie and Freddie."


I also noticed that "The treasury’s estimate is dependent on many factors, including the health of the economy and the housing market."

Seems we're not quite out of the woods yet.

Dave for a guy who claims to be non-partisan your last couple of posts sure appear to be so. Besides the obvious moral hazards of cheerleading for Corporatism do you really believe that it was George W. Bush who was the ultimate mastermind in "engineering" the crisis in the first place?????

Instead of arguing about the merits of subsidizing the banks and businesses that were the major contributors to the financial collapse how about we discuss the policies that got us there in the first place? Like the massive expansion of credit.

You're both right.

[quote=StinkingWaters]i]


Dave for a guy who claims to be non-partisan your last couple of posts sure appear to be so. Besides the obvious moral hazards of cheerleading for Corporatism do you really believe that it was George W. Bush who was the ultimate mastermind in "engineering" the crisis in the first place?????



I don’t think I ever claimed to be nonpartisan, but I do criticize both parties. No doubt my sympathies are more left than right, but I can see the warts on both parties, and love poking fun at those who have on blinders and can see no wrong with their party. If you read my column you would know I took Clinton to task many times. I also am far from a total Obama cheerleader. i.e. his administration’s recent push to barge Columbia River salmon is just wrong.

As for your question of did Bush engineer the collapse? Well, no, not if you mean did he personally have a hand in it. But it DID happen on his watch. Where else would you have the buck stop?

I was a bank examiner at one time and can tell you the crap that was allowed under Bush would not have been tolerated under Nixon. When I was a trust examiner we had five men covering five states. Today there is only one.

I place a lot of the blame on bankers like the head of Wa Mu who knowingly kept writing risky loan even after it was clear they were in big trouble. Of course he was only paid $125 million for his last year of "service"

I believe we need much more Teddy Roosevelt style oversight and regulation of the banks. After this fiasco who could believe otherwise?

BTW I made no effort to leave out anything. I posted the first few sentences of an article and provided a link to let anyone interested see the entire article.

Fair enough Dave

Where can I find your column?,...would love to check it out. Recently purchased your book on jig fishing for salmon and steelhead and have been enjoying that.

I would have the buck stop with the Board of Governors of the Federal Reserve. Along with the Presidential Working Group on Financial Markets. Commonly refered to as the "Plunge Protection Team".

The policies and events that contributed to the overall crisis were decades in the making in my opinion. The abandonment of Bretton Woods I in 1971. The formation of the PPT in response to the 1987 crisis. The repeal of Glass Steagall under Clinton ushered in by Rubin and Summers. The 1998 CRIA by the same crew. The stock bubble fueled by the Fed in 2000. The resulting interest rate policies by the Fed after the 2000 bubble to fuel an artificial housing market. The list goes on.

I agree government agencies tasked with regulating markets failed to perform their jobs. The ratings agencies, the CFTC, the SEC. What they failed to address was the fraud that was, and still is, taking place. I don't believe creating a monolithic consumer protection agency like is currently being proposed and providing government backstops will prevent any of this from happening again. I think it will do quite the opposite.

SW: I have to admit I do not place you in the RWWJ category. You know your facts and do not seem complexly blinded by party politics. Like Hankster you are one who does more than C&P and parrot the party line.

I do however disagree with your last statement. Laissez faire has proven not to work. Just ask Allen Greenspan when he’s in a reflective mood.

When I was a bank examiner we would have forced the banks to immediately write off much of the bad paper that eventually crushed the system. We had the power and we used it, IMHO wisely.

I also agree that the credit crunch had many fathers, but much stronger federal oversight could have stopped a lot of this.

Now we have a recovery hampered by tight credit. I have a friend who has been in business for 30 years. His orders are suddenly recovering but he can’t fill all the orders because he does not have enough staff and he can’t hire more because he can’t get credit, in spite of the fact he has had a perfect credit record for many years.

"I was a bank examiner at one time"

So you did work once instead of just rove around fishing exotic places.

The Bush admin believed in no oversight on every level of every market which meant greed ran amuck.

"Now we have a recovery hampered by tight credit."

And the stimulus was supposed to correct that only the bankers said F you we are hanging on to it.

You're so close Dave

You correctly identify the symtoms of the disease, yet incorrectly diagnose the problem.

Greenspan's musings of his being incorrect about his personal philosophy during senate hearings on CDS markets was disingenuous at best and politically sinister at worst.

Allowing companies like AIG and JPMorgan to sell insurance contracts on bond portfolios with absolutely zero leverage limits and no ownership was not, and is not something that would be condoned or allowed in a laissez faire economy. Free markets must follow the rule of law. One of those laws and perhaps it's most important one is those concerning fraud. What AIG and JP were doing was committing fraud by selling contracts it did not have the assets to honor (in terms of proper leverage). Greenspan, Rubin, Summers, Bernanke, all allowed this to happen despite, and in the face of, explicit warnings. That is not the failure of free market capitalism or laissez faire. That, in fact, is the success of cronyism, corporatism, or corporate facism. Very close relatives to the s-word,.... socialism.

Your friend can't get credit bcause the banks are holding their assets on Fed balance sheets. Capital is not limitless. The lion's share of credit is being used by the federal government to prop up the very system it created to fail. Although, I'm sure if he talked to Dogfish or lenders at other small banks they might be more than glad to earn his business. The problem is, now that many of the culprits of the disaster have been rescued with taxpayer funds it makes it much more difficult for small market banks to compete. Sadly,....a large number of them will fail.