While at the doctor’s office today, I was thumbing through a July issue of Fortune Magazine. An article entitled Surprise! The big bad bailout is paying off caught my eye. When I started reading the article, I couldn’t wait to get home to look up the article online.
I’m one of those that felt the bailout didn’t do anything for homeowners who were losing their homes. The bailout should have been bigger. That’s my biggest issue with the bailout.
However, a frequent meme on the right that the bailout was a disaster and failed miserably is false.
Here’s Fortune’s analysis:
CNN Money
The U.S. government’s often maligned $14 trillion intervention not only staved off global collapse – but is making money.
The bailout of the financial system is roughly as popular as Wall Street bonuses, the federal budget deficit, or LeBron James in a Cleveland sports bar. You hear over and over that the bailout was a disaster, it cost taxpayers a fortune, we didn’t really need it, it didn’t work, it was a failure. It has become politically toxic, which inhibits reasoned public discussion about it.
But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are coming out ahead on it — by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3% represented by the massively unpopular Troubled Asset Relief Program. Yes, that’s right — TARP is only about 3% of the bailout, even though it gets about 97% of the attention.
A key reason for the rescue’s profitability is that the Federal Reserve System has already turned over more than $100 billion of bailout-related income to the Treasury, and is on track to turn over $85 billion more this year and next. That’s not something most people include in their math. On the negative side, we’re including what may be the first overall cost calculation of a special tax break that’s worth tens of billions of dollars to four big bailout recipients. And, of course, we’ve analyzed reports from the Congressional Budget Office, the Treasury, the Federal Deposit Insurance Corp., and other sources.
Related articles
- Allan Sloan Defends His Numbers – The Bailout Did Work And Here’s Why (businessinsider.com)
- Only the Ideologues Are Surprised: (brothersjuddblog.com)
- The History of US Government Corporate Bailouts (creditloan.com)
- Unabashed B.S. from Fortune magazine (benzinga.com)
