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Fact-Check: From GM to TARP to AIG, The Federal Bail-Out By the Numbers

| September 6, 2012

federal bailout tarp aig fact-checking

Surely he’s come down by now, with better numbers. (David Resz)

Quick, how many billions in the red are taxpayers on the bailout of GM? AIG? Fannie and Freddie? Is it true that the government has reaped a profit from bailing out the banks?

It should be easy to find answers to such questions. But while it’s a snap to find rosy administration claims about the bailout, finding hard numbers is much more difficult. That’s why, since the bailouts began in 2008, we’ve maintained a frequently updated site to provide them. Now we’ve retooled our database to make it even easier to find these sorts of answers.

So you can effortlessly discover that it’s $27 billion for GM$23 billion for AIG$91 billion for Fannie, $51 billion for Freddie, and yes, the bank investments have so far returned a profit of $19 billion.

We also make it easy for you to see which investments have resulted in losses (39 so far in total) and to sort bailout recipientsby how far in the red or black they are. As always, our scorecard page adds it all up and shows where both bailouts — the Troubled Asset Relief Program, better known as TARP ($55 billion in the red) and Fannie and Freddie (negative $142 billion) — stand right now.

Ultimately, the bailout of GM seems likely to result in the TARP’s single biggest loss. But since the government still holds about a third of the company’s stock (currently worth about $10 billion), we don’t include it on our list of losers yet. It’s possible the government will sell the stock for more than it’s currently worth, recouping more of its investment.

For now, the reigning bust is the $2.3 billion investment in the bank CIT, which landed in bankruptcy less than a year after its bailout. Second on the list is Chrysler, which resulted in a $1.3 billion loss.

“The government’s financial stability programs are expected to cost far less than many had once feared during the crisis, and we’re continuing to make significant progress recovering taxpayer investments,” said a Treasury spokesman.

Over time, that list of losing investments is likely to grow far beyond 39, because many of the smaller banks that have yet to repay the government are struggling. Although more than 300 banks have exited TARP (often repaying with money from another government bank program), nearly 400 remain. Of those, 162 are behind on their dividend payments to the Treasury Department. According to the GAO, the banks that are languishing in TARP tend to be weaker than those that have left, and at least 130 appear on a secret “problem bank” list kept by regulators.

The TARP’s main bank program was supposed to be reserved for healthy banks, but among the losing investments are banks that were troubled even when they first received the money. Central Pacific Financial, a Hawaii bank, got its $135 million in early 2009 despite regulators having just ordered it to raise additional capital. As we reported then, the approval came two weeks after staff for Sen. Daniel Inouye, D-Hawaii, who had helped establish the bank and owned a large amount of the bank’s stock, inquired about the bank’s application for funds. Both regulators and Treasury denied that the inquiry affected their decision. Taxpayers ultimately lost $61 million from the investment.

Also notable among the failed investments is South Financial Group. The bank received a $347 million government investment in 2008 about a month after its former CEO, Mack Whittle, retired with a $18 million golden parachute. Taxpayers ultimately lost $200 million while the CEO kept his package. Contacted by ProPublica, Whittle said, “I founded [South Financial Group] in 1986 and take offense that anyone would imply that retirement benefits were not warranted.” He added that the benefits had been negotiated long before he announced his retirement in the summer of 2008 and that he’d retired by the time the bank applied for TARP funds.

Of course, the government has already turned a profit on its bank investments overall, because the biggest bailouts — particularly Citigroup and Bank of America (each received $45 billion) — resulted in large profits. None of the banks remaining in TARP have net outstanding amounts over one billion dollars.

The Treasury wants to get rid of those remaining bank investments as soon as it can — even when that means selling stakes in apparently healthy banks for a discount, as ProPublica’s Jesse Eisinger reported last month.

What defines a profit? So far, the Treasury has allowed many banks to exit TARP after receiving most, but not all, of the amount owed. But in cases where the Treasury received enough other revenue (e.g. through dividend payments) from the bank to result in a net gain, we label that investment as a profit. So far, that’s been the case for 26 banks.

The final cost of the TARP, the Fannie, or the Freddie bailout isn’t possible to know.

For the TARP, it depends on the biggest remaining investments: AIG and the remains of the auto bailout, GM and GMAC (now called Ally Financial). The net outstanding amount of those three companies together is about $61 billion. At this point, it seems likely that Treasury will ultimately recoup its bailout of AIG. The auto companies, on the other hand, seem likely to result in a loss approaching $20 billion, according to both Treasury Department and Congressional Budget Office estimates.

Another big factor is the TARP’s housing programs, its mortgage modification programchief among them. Although Treasury set aside more than $40 billion for its various initiatives, less than $5 billion has been spent so far, a testament to the limited reach of the programs. Since those are subsidies, none of that money will be repaid, and any spending ups TARP’s tab. Earlier this year, the CBO estimated that ultimately $16 billion would be spent.

Of course, all of these numbers benefit from being put in a broader context. The Obama administration argues that the TARP should be credited with blunting the force of the financial crisis and saving “more than one million American jobs.” Critics like former TARP inspector general Neil Barofsky say the program may have stemmed the damage from the crisis, but it did so by largely preserving the broken too-big-to-fail system that caused the crisis. It’s also worth mentioning that the Federal Reserve played an enormous role in supporting the biggest banks and allowing them to exit TARP.

The fate of the Fannie and Freddie bailouts is even harder to figure, although the Treasury recently announced that all of the companies’ profits from now on will be handed over to Uncle Sam each quarter. Their tabs should decrease, but how quickly and for how long they’ll be allowed to exist is unclear.

For now, our site provides a snapshot of the two bailouts as they actually stand. We’ve been at it since 2008, and we’ll continue to update it frequently.

Paul Kiel, ProPublica

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8 Responses for “Fact-Check: From GM to TARP to AIG, The Federal Bail-Out By the Numbers”

  1. crzy2sew says:

    Generally when people start talking about billions of dollars, where it went etc. my eyes start to glaze over & my mind shuts down, but this I understood! Thanks…. still a crazy mess

  2. Liana G says:

    The only positive and reassuring piece in the entire article was from “a Treasury spokesman”. And if the economy is doing well why is the fed chairman talking about the need for another round of quantitative easing aka printing money out of thin air. Yep! The American people are desperately in need of another 4 more years of distraction.

    Here is a eye popping article to read while celebrating Obamacare victory.

    Ouch! Hospital to review woman’s $83,046 scorpion sting bill.

    CHANDLER, Ariz. – A hospital that billed a woman $83,046 for a visit that included administering two doses of scorpion antivenom said Wednesday that it plans to adjust the woman’s bill and review its price for the specialty medication. Marcie Edmonds provided a copy of her bill to The Arizona Republic last week that showed Chandler Regional Medical Center charged her $39,652 per dose of Anascorp, a scorpion antivenom approved by the Food and Drug Administration last summer. She received two doses to treat her symptoms during a three-hour stay in June after a bark scorpion sting.[…] The Arizona Republic reported last year about the pricey markup Arizona hospitals were charging for the antivenom made in Mexico. Pharmacies in Mexico charge about $100 per dose. After the Food and Drug Administration approved the drug last year, Tennessee-based Rare Disease Therapeutics sold the drug to a distributor for $3,500 per dose. The distributor charged hospitals about $3,780 per dose.


  3. kenpc says:

    Citibank and BOA were the most profitable. Weren’t they both done during the Bush administration?

  4. Prescient33 says:

    If anyone thinks GM stock will rise from its present levels to the estimated $53.00 a share needed for the taxpayers to break even, I have a bridge spanning the East River between Manhattan and Brooklyn you might be interested in buying. Contrary to the Regime’s lies, GM is not #1 in the world or the USA, it is Toyota, and it’s not looking back.

  5. Ben Blakely says:

    Pres. Odumbo loves to brag about “saving” GM.

    But odumbo NATIONALIZED GM to take complete control and dole out the remains to his union socialist buddies who would then kick back to obama, the corruptor in chief.

    If GM had been allowed to go bankrupt, it would have reorganized, been released from the suffocating, stifling union contracts and become a leaner and wiser car corporation. But no, barry obama decided to cash in on the event and subvert billions to his union buddies.

    Now GM is doing the bidding of Barry obama. They are making Volt green cars that cost $89,000 each and selling them for $38,900. That is because Barry obama never ran a lemonade stand to learn how business works. He is totally ideological and pure socialist. He has zero understanding of business or any insight into running a company. We have pure IGNORANCE sleeping in the white house.

    GM stock is down to new lows. GM is hemmoraging cash on losing car operations. If it was not for their China operations, GM would be going bankrupt again.

    Don’t believe barry obama or jerky Joe biden when they scream at you saying they saved 1,000,000 jobs. They lie (what a surprise!) In fact, the U.S. employs only 700,000 workers and a good portion of them work at Ford and other companies that did not take any government loans. So obama and his jerky Joe vice president continue to shout their dogma and outrageous lies and the gullible among us believe what this foul flim flam man is spouting.

    In November, you have your only opportunity to save this nation and your children’s future. Vote for Romney/Ryan and recover the country from the marxist socialist barry obama.

  6. Dorothea says:

    @Ben Blakely:

    Ummm, a marxist socialist plot? Are you trying to say that Romney is part of a marxist socialist plot? After all, Romney is trying to take credit for GM’s resurrection.

    Note: It would be appropriate to add some citations for your claims.

  7. Dorothea says:

    @Ben Blakely

    Thanks for trying to educate this leftist with the link to John Lott’s blog, uber right winger and Ayn Rand admirer. But you didn’t answer my one and only comment in this thread. If Romney thought that the auto buyout was such a bad idea, why did he (Romney) attempt to take credit for the idea?

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