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The TARP Has a $159 Billion Loss !!

Posted by Larry Doyle on June 30, 2009 3:27 PM |

The American taxpayer was going to make money on the investments in assets related to Bear Stearns, AIG, Citigroup, Bank of America, ad nauseum, correct?

Is it even possible to track the massive government outlays across the entire economic landscape? Is it further possible to measure the actual cost of the outlays as a percentage of the overall subsidies? Can we navigate this terrain without getting bogged down in the midst of a thicket of government data and statistics? You have come to the right place.

Our trusty financial primer, Subsidyscope (right sidebar here at Sense on Cents) has just released a report, entitled Estimated TARP Subsidy Rate Rises, which links to a report from the Congressional Budget Office highlighting all aspects of the TARP (Troubled Asset Relief Program).

Just as “you can’t tell the players without a program” when attending a sporting event, “you can’t track Uncle Sam without Subsidyscope and Sense on Cents.”

What do we learn? Uncle Sam is still holding some TARP firepower. The TARP was launched as a $699 billion capital commitment. If you recall, the TARP legislation was passed as a vehicle to purchase toxic assets from banks. It has moved a long way away from that.

The TARP now covers 4 initiatives:

1. capital purchase and repayments from financial institutions

2. additional support for large financial institutions

3. financial assistance to automakers and related businesses

4. other actions, such as mortgage modification, TALF subsidies, and purchasing securities backed by Small Business Administration loans.

To be perfectly frank, I think it is very plausible that the actual capital commitments and activities ongoing under the TARP may not have met the pure letter of the initial legislation. That said, in an environment in which so many initiatives are capital constrained, there is no real legislative pushback. When was the last time we worried about the spirit or letter of our laws when we had bigger issues concerning money?? Money is more important than legal precedents, correct? We’ll get into that on another post.

On the numbers front:

Of the $699 billion in total capital, $142 billion has yet to be committed. Of the funds already allocated, Uncle Sam has incurred a total cost of $159 billion. What does that mean?

Recall the number of times that government officials told taxpayers that we would make money on investments in AIG and the like. Well, so far we’ve lost $159 billion dollars across all our TARP investments. The loss is calculated as the difference in funds committed and allocated to securities and the market value of those securities. That loss represents 36% of the funds committed and actually allocated.

Not that anybody in the media or the financial industry would want you to know that.

Program, here….get your program….step right up…program, here!!

Enjoy the ballgame, folks!!


  • Webe Fooked, Phd (piled higher and deeper)

    makes one wonder how long this ‘charade’ can go on before every single american citizen is out of a job, bankrupted, and living hand to mouth due to the corruption that is endemic and out of control in this country?

    how much more can people take before they revolt? how much?

  • TeakWoodKite

    LD I’ve never understood how anyone thought a profit was to made from poison.

    Next they will be securitizing Cap and trade credits.
    Anyway, I wanted to spending time catching up, while I spend the next week furloughed from work and your site is a first stop.


    • TWK…enjoy your time off. Glad you like the site but hope you get away from some of this stuff as well.


  • Adaml

    Americans need to know the real history of this country. We have been through massive rip-offs politically, economically and socially before many times. That this has been suppressed makes all this seem so new. But it is not. We have been on the verge of total revolution in this country more than once. The poor have been so much poorer and desperate. Things are going to have to get a lot worse before a mass uprising occurs. Even then we are going to have to have a clear and firm basis to rally the People to this time win and remove the parasites and corrupted and corrupting structures. The movements are far from adequately organized and radicalized. We still mostly believe that band aids will do the trick. We do not realize that we are in the middle of the “mother of all bubbles”, the collapse of the entire Eco-complex. How fast can we convert the Natural capital to “money” has been the core mantra? Well we are confronting the liquidation of our collective root foundations and only an total revamping of what we call civilization will make the difference. Will that happen? We shall see.

  • common sense

    Interest is an exponential function, no system that pays out interest can ever be stable as interest is extra money take out of a pool of principle…interest by its very nature calls for money to be printed out of thin air. You certainly cant pay interest on gold standard as it would take the creation of new gold to pay off that extra money and gold i s limited resource. Can you really make money out of money if it weren’t for paper currency? Its time to be honest, you cant make money from money, everyone in financial services should be out of a job as they do not produce anything for society except worthless paper products. Same goes for politicians or government for that matter, parasites the lot of em.

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