U.S. ends TARP with $15.3 billion profit - Dec. 19, 2014

 

Treasury sold its remaining shares Friday in Ally Financial, its last remaining major stake from the $426 billion bailout of banks and the U.S. auto industry.

The Troubled Asset Relief Program was passed in 2008, in the wake of Lehman Brothers' bankruptcy, as the nation's financial system was on the verge of collapse and economists feared another Great Depression. At the height of the bailout, Treasury owned a significant stake in all of the major U.S. banks, such as Citigroup (C) and Bank of America (BAC), two of the nation's Big Three automakers -- General Motors (GM) and Chrysler Group (FCAM) -- as well as one of its largest insurers, AIG (AIG).

But with the sale of the Ally (ALLY) stock, Treasury now only holds stakes in 35 small community banks.

Ally Financial was formerly known as GMAC, and had been GM's finance arm. While it was hurt by the plunge in car sales, its move into subprime mortgages did the most damage. Ally was bailed out as part of the auto industry bailout, since its failure would have left a significant portion of the nation's car dealers without the financing they needed to stay open.

Treasury received $1.3 billion from its final sale of Ally stock Friday, leaving it with a $2.4 billion profit on the company.

Overall, the auto bailout was the one big money loser for TARP. Even with the Ally sale, taxpayers lost about $9.2 billion.

But opting not to bail out the auto industry likely would have proven far more costly, since GM, Chrysler and many car dealers likely would have gone out of business without the government's help.

If GM and Chrysler had gone under, it would have cost an estimated $39 billion to $105 billion in lost tax revenues as well as assistance to the unemployed, according to a study from the Center for Auto Research. And the government also would have been on the hook for billions in promised pension payments to autoworkers.

U.S. ends TARP with $15.3 billion profit - Dec. 19, 2014

AIG’s bailout is a quiet success - The Washington Post

none was less morally deserving than AIG

AIG bailout is working pretty well? Actually, yes. The firm used $140 billion of the $182 billion available from the government, divided between Fed loans and Treasury equity purchases. The bulk of that has returned to the government, with interest.

spent the past two years selling excess assets and modernizing its core insurance businesses, AIG is profitable again. The firm’s only remaining debt to the Fed is a $9.3 billion loan, against which the central bank holds collateral valued at almost twice that

Click on the following to read more of the Washington Post’s Opinion:  AIG’s bailout is a quiet success - The Washington Post

Behind Administration Spin: Bailout Still $123 Billion in the Red - ProPublica

 

ProPublica, we've provided a comprehensive bailout database [4] since TARP's launch. It shows not only how much money has gone to each recipient [4], but how much each has paid in interest and dividend payments. With all this data, we're able to clearly show how deep in the hole the program remains [5]. And the answer as of today is $123 billion.

Add that to the bailout of Fannie Mae and Freddie Mac -- which our site also tracks and is separate from the TARP -- and taxpayers are $257 billion in the hole [5].

Click on the following for more details:  Behind Administration Spin: Bailout Still $123 Billion in the Red - ProPublica

stiglitz tarp returns a "drop in the bucket" compared to damaged”

 

Stiglitz: TARP Returns a "Drop in the Bucket" Compared to Damage Done

Posted Oct 27, 2010 12:18pm EDT by Aaron Task in Newsmakers, Recession, Banking

 

…, such talk misses the big picture, says Columbia Professor and Nobel Prize-winning economist and author Joseph Stiglitz.

"The fact some of the banks paid back what was given to them on very favorable terms...is just a drop in the bucket compared to damage done to the economy," Stiglitz says in the accompanying video, taped at The Economist's Buttonwood Gathering.

Including the "enormous hidden subsidies to the banking system," the real economic cost of the bailouts is in the trillions, Stiglitz says.

"If the U.S. government had provided money to ordinary business at zero interest rates, what would our economy be like?," Stiglitz wonders. "What we did is give zero rates to banks, they then lent at much higher interest rates; that's the recapitalization. That's the gift."

Meanwhile, low interest rates have crushed savers and anyone living on a fixed income, he notes.

As to the idea that the bailouts worked because the financial system was saved and the economy rebounded, Stiglitz has a sharp retort: "We've managed to stabilize the economy [but] we shouldn't confuse stabilization with recovery...[and] the way they stabilized it unnecessarily impaired the ability to have a strong recovery."

Click on the following for more details;  stiglitz tarp returns a "drop in the bucket" compared to damage done: Tech Ticker, Yahoo! Finance

Garrett Johnson: The Biggest Financial Bailout of Them All

[in December 2009 the government] lifted all caps in emergency bailout money to Fannie Mae and Freddie Mac. That means the taxpayer was on the hook for all losses at these two mortgage giants no matter how large the losses

Click on the following for more details:  

Garrett Johnson: The Biggest Financial Bailout of Them All

Treasury to Give $3.8 Billion More to GMAC in a Third Taxpayer Bailout -

The financing will allow GMAC to sell off unprofitable mortgage assets at a deep discount, resulting in big charges upfront but making the company more viable and attractive to investors.

The government’s stake in GMAC, which handles financing for customers and dealers of both General Motors and Chrysler, will rise to 56 percent, from 35 percent.

Cerberus Capital Management, the private equity firm that bought a majority stake in GMAC in 2006 and later briefly owned Chrysler, now will hold 14.9 percent of GMAC. Third-party lenders will own 12.2 percent, and 16.6 percent will be owned or managed indirectly by G.M.,

Click on the following for more details:  Treasury to Give $3.8 Billion More to GMAC in a Third Taxpayer Bailout - NYTimes.com

Chrysler Considers Challenge to Dealer Legislation - NYTimes.com

[FIAT’s]Marchionne said that restoring large numbers of dealerships could “cause havoc within Chrysler.” G.M. and Chrysler proposed their own review processes last week in an effort to keep Congress from getting involved.

“The offer that we made had all the elements of equity and fairness

Click on the following for more details and an update on GM/Chrysler’s federal loans:  Chrysler Considers Challenge to Dealer Legislation - NYTimes.com

U.S. Said to Reconsider Quick Sale of Citigroup Stake - NYTimes.com

The new stock is expected to be priced at $3.15 a share — below the $3.25 price at which the government assumed its one-third stake in Citigroup. The Treasury is now expected to retain its stake and try to sell the stock over the next 6 to 12 months.

Abu Dhabi Investment Authority had filed a multi-billion dollar arbitration claim claiming “fraudulent misrepresentation” on the part of Citigroup after the government-run fund’s $7.5 billion investment in Citigroup went south.

Click on the following for more details:  U.S. Said to Reconsider Quick Sale of Citigroup Stake - NYTimes.com

Sterling gets bond authority to develop: Unnamed retailer interested in east end

The city of Sterling was given authority Tuesday to issue $6.2 million in federal economic stimulus bonds to an undisclosed retail builder interested in moving into the city’s east end.  The unanimous vote by the Whiteside County Board does not release the money, but it gives Sterling the authority to issue the bonds if the builder commits to the project.

Click on the following for more details:  saukvalley.com | Sterling gets bond authority to develop: Unnamed retailer interested in east end

Permanent roof, other work going on at Algonquin's Riverside Square

Here is where Rockford’s AMCORE Bank lost some of its money--$12.100,000

Amcore began foreclosure proceedings against the company, which still owes the bank $12.1 million, according to court records.

Click on the following for more details: Daily Herald | Permanent roof, other work going on at Algonquin's Riverside Square

A blog in Algonquin indicates that work on the project by AMCORE has stopped.  What does this mean?  Can the building be sold now?  Can it survive the Winter or condemnation by the City?  Read the rest of the story at:  http://www.firstelectricnewspaper.com/2009/12/riverside-square-conflict-looms-in.html

CIT Group moves away from bankruptcy

 

The government gave CIT $US2.3 billion  last fall as part of its $US700 billion  bank rescue program. That $US2.3 billion investment was lost when CIT filed for bankruptcy.

CIT Group Inc, one of the biggest US lenders to small and mid-sized businesses, said that a judge approved its reorganisation plan and it plans to emerge from bankruptcy protection on Thursday.

Click on the following for more details:  CIT Group moves away from bankruptcy | Stuff.co.nz

Treasury Forecasts Smaller Loss From Bank Rescue

 

The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.

$42 billion in losses is a net figure that accounts for some profits to offset the losses. The Treasury officials said the government had lost about $60 billion, roughly half to Chrysler and General Motors and the other half to the insurance giant American International Group.

Click on the following for more details:  Treasury Forecasts Smaller Loss From Bank Rescue - NYTimes.com

Bank of America to repay TARP, raise cash

 

Bank of America Corp. said Wednesday it plans to repay its $45 billion in government bailout funds in the next few days

The bank said it has paid $2.54 billion to the government so far in dividends on the TARP money. BofA said it is not yet exercising its right to repurchase warrants that the government received in return for the bailout money. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

Click on the following for more details:  Business Journal | Bank of America to repay TARP, raise cash

Robert Reich: The Housing Crisis and Wall Street Shame

Sunday, November 29, 2009

One out of four homeowners is now under water, owing more on their homes than the homes are worth. Why? The biggest single factor behind the housing crisis is rising unemployment. According to the latest ABC-Washington Post poll, one out of every three Americans has either lost their job or lives in a household with someone who has lost a job. Today it takes two and sometimes three incomes to buy the groceries and pay the mortgage or the rent. So if one of those incomes is gone, a homeowner can't make the payment.
The scourge of unemployment is splitting America into three groups: (1) the third just mentioned, whose households are in danger of losing their homes and whose kids are surviving on food stamps (that's up to one in four children in America today); (2) the vast majority of Americans who are managing but worried about keeping their jobs and homes; and (3) a small number who are taking home even more winnings than they did in the boom year 2007.
Prominent among category (3) are Wall Street bankers, many of whom are now concluding their most profitable year ever. Goldman Sachs is so flush it's preparing to give out bonuses in a few weeks totaling $17 billion. That will mean eight-figure compensation packages for lots of Goldman executives and traders. JPMorgan Chase is rumored to have a bonus pool of around $5 billion. The three other major Wall Street banks are ratcheting up their compensation packages so their "talent" won't be poached by Goldman or JPMorgan.
Wall Street is booming again in large part because the rest of America -- categories (1) and (2), above -- bailed it out to the tune of $700 billion last year. The Street has repaid some of that but, according to the bailout program's inspector general, much of it is gone forever. For example, the taxpayer money that bailed out giant insurer AIG went directly through AIG to its "counterparties" like Goldman Sachs -- to whom Tim Geithner, according to the inspector general, gave away the store. As Goldman Sachs prepares to dole out some $17 billion to its executives and traders, it's worth noting that Goldman received $13 billion a year ago from the rest of us via AIG and Geithner, no strings attached.
Which brings us back to homeowners who are falling further behind. The $75 billion federal program designed to bribe banks to modify mortgages has been a bust. No one knows the exact number of mortgages that have been modified (that will be reported next month) but housing experts I've talked with say it's a tiny fraction of the number of homeowners in trouble. Seems that the big banks can't be bothered. "Some of the firms ought to be embarrassed," Michael Barr, the assistant Treasury secretary for financial institutions told the New York Times.
Barr says the government will try to use shame as a corrective, publicly naming institutions that have moved too slowly. But the banks have done almost nothing to date. "We've made dramatic improvements, and we continue to try to get better," says a spokesman for JPMorgan Chase, but as a practical matter JPMorgan has done squat.
Shame? If we've learned anything over the last year, it's that Wall Street has none. Ten months ago Wall Street lobbyists beat back a proposal to give bankruptcy judges the right to amend mortgages in order to pressure lenders to reduce principle owed, just like Wall Street lobbyists are now beating back tough regulations to prevent the Street from causing another meltdown.
Shame? For Wall Street, it all comes down to PR, at minimal cost. Goldman Sachs, attempting to preempt a firestorm of public outrage when it dispenses its $17 billion of bonuses, is setting up a crudely conceived $500 million PR program to help Main Street.
Shame won't work. Only political muscle and courage will. Congress and the Obama administration should give homeowners the right to go to a bankruptcy judge and have their mortgages modified.
And while they're at it, resurrect the Glass-Steagall Act that used to separate investment from commercial banking, so Wall Street can't continue to use other people's money to gamble.
Finally, before Goldman hands out $17 billion in bonuses, claw back the $13 billion Goldman took from AIG and the rest of us and add it to the pool of money going for mortgage relief.

For more of Mr. Reich’s opinions and analysis go to:  http://www.robertreich.blogspot.com/

CIT's bankruptcy raises new questions about bailout

Analysts expect more bailed-out firms to fail in the months ahead. Others may survive but will struggle to repay the government.

About $400 billion of federal investments remain in the corporate sector, much of it channeled through TARP. Critics of the program say losses were inevitable, in many cases

CIT's bankruptcy raises new questions about bailout - washingtonpost.com

Bank Of America To Pay U.S. $425M To Exit Agreement

Bank of America is paying the fee to exit an arrangement in which the government had promised to cover $118 billion in risky assets

Bank of America has received a total of $45 billion from the Treasury's $700 billion financial bailout pot, which is financed by taxpayers.

The company says it wants to repay $20 billion of that money, which would remove the company from a list of firms that have received "exceptional" assistance from the government.

Such companies are subject to greater government scrutiny, including having to provide plans outlining compensation packages for their highest-paid employees. The Obama administration's pay czar, Kenneth Feinberg, has the power to veto them.

Click on the following for more details from NPR:  Bank Of America To Pay U.S. $425M To Exit Agreement : NPR

South 'burbs show how it's done : SearchChicago Homes : News

 

south suburban group hopes to focus their efforts on communities that are also near transit and the Calumet River. Since there won't be enough funds to help the whole region, putting dollars where people can live near work or transit integrates a lot of good ideas.

So far, so good

The group has been told they made the first cut and are semi-finalists for some Neighborhood Stabilization Program cash, said Janice L. Morrissy, the south suburban housing collaborative's new director of housing initiatives. They should find out by the end of July funds are coming their way.

Click on the following for the rest of the story:  South 'burbs show how it's done : SearchChicago Homes : News

Carmakers’ bankruptcies face skeptics - - BusinessRockford.com

 

Congress had no opportunity to review the Obama administration’s decision to take 60 percent ownership of GM and a smaller stake in Chrysler

Carmakers’ bankruptcies face skeptics - - BusinessRockford.com

In Overhaul, G.M. May Look to Its Far-Flung Arms - NYTimes.com

 

Unlike G.M.’s United States business, these operations have been growing. Sales increased 10 percent last year in Brazil, 9 percent in India and 6 percent in China. Recent numbers in some areas are even better — G.M.’s sales in the Asia Pacific region were up 44 percent in May compared with the year before.

In Overhaul, G.M. May Look to Its Far-Flung Arms - NYTimes.com

Why taxpayers won’t get return on GM investment | csmonitor.com

 

America will own a majority of GM, but for now it may be more accurate to say that GM owns a piece of every American taxpayer.

Why taxpayers won’t get return on GM investment | csmonitor.com