Banks subsidizing auto TARP, extra money could be spent

Posted Dec 10th 2009 9:00AM by Tom Johansmeyer
Filed under: JPMorgan Chase (JPM), Bank of America (BAC), Amer Intl Group (AIG)

The bailouts of late 2008 and 2009 have cost the American taxpayers $61 billion, according to the Treasury Department, but the banks aren't to blame this time. The auto manufacturer bailout, which includes Chrysler and General Motors (GRM), has cost the country more than $30 billion, with American International Group (AIG) consuming another $30 billion.

Meanwhile, Bank of America (BAC) has already made good with the government, and several banks -- such as Capital One (COF), JP Morgan Chase (JPM) and TCF Financial (TCB) -- only have to clean up situations regarding the warrants they've issued. And interestingly, the losses from the bailouts on AIG and auto manufacturers are being offset by profits from the bank bailouts, which could generate additional funds of up to $19.5 billion.

However, this isn't enough to reach the breakeven point, which is expected to be $41.5 billion. Repayments by banks related to the Troubled Asset Relief Program should reach $116 billion soon, which includes the $45 billion from Bank of America. Next year repayments of $175 billion are expected.

Treasury Secretary Timothy Geithner expects $550 billion of the $700 billion in TARP money allocated to be spent next year under a proposed program extension, with $364 billion committed in the 2009 budget year (which ended on September 30, 2009). Only $42 billion isn't expected to be recovered.

For now, the additional $19.5 billion is being eyed in Washington, along with other repaid TARP funds that are now being viewed as available. The Obama administration wants to divert the capital to job creation programs, with the 10% unemployment rate still waiting to be addressed. The latest spending package being proposed, according to Democratic leaders in Congress, could range from $75 billion to $150 billion. Opponents call the move irresponsible, as it converts TARP to an ongoing spending program.

Tags: AIG, american international group, AmericanInternationalGroup, auto, auto industry, AutoIndustry, bac, Bank of America, BankOfAmerica, Capital One Financial, CapitalOneFinancial, COF, general motors, GeneralMotors, grm, insurance, JPM, JpmorganChase, tarp, TCB, TCF Financial, TcfFinancial, timothy geithner, TimothyGeithner, treasury, Troubled Asset Relief Program, TroubledAssetReliefProgram

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Reader Comments (Page 1 of 1)

12-11-2009 @ 5:47PM

Allen said...

And, of course, we realize that this is just so much government hot air - that the taxpayers have been screwed again! I have a proposal - We, the citizens of the United States, as the aggrieved parties and victims, will bring a class action lawsuit under the RICO statutes (and we should qualify) against AIG, Goldman Sachs, Lehman, Bank of America, CitiCorp etc., and all of their senior executives, such as Lloyd Blankfein, Kenny Lewis, Marty Sullivan, Vikrim Pandit, (designated as co-conspirators) seeking forfeiture of all of the money they have stolen, as well as punitive damages. This would allow us to seize their bank accounts, homes, cars, stocks, corporate assets and real estate, all of which could be liquidated to make the taxpayers whole.

Now, if we can only find a federal judge with balls enough to allow this to proceed!