banxxxxxxx
It occurred to me yesterday that a lot of the complaints about bank bailouts stem from a misunderstanding. I believe (but cannot fully prove) that others think that the banks were given money by the government, and that was that. Money: gone. In fact, this is not what happened at all. Go here if you want to see all the gorey details, but the point is: Bank Support Programs — $245.10 billion disbursed; $257.93 billion “total cash back” (including interest and gains on warrants and stuff). And the programs haven’t even fully wound down yet (largely because the “community” banks that everyone is so enamored of haven’t been able to afford repayment yet), so there’s more money to come. Yes, there have been some losses, but those all relate to smaller institutions you probably haven’t heard of. The likes of Bank of America, Citigroup, Goldman Sachs, Wells Fargo, Morgan Stanley, blah blah blah? It’s been a long time since they repaid their debts to Uncle Sam (with interest, plus the aforementioned warrants, which are basically stock options).
It’s still possible, of course — likely, even! — that using all these billions to inject extra capital into banks was not a good use of scarce resources at the time (and, what with Europe and all, they’re looking scarcer and scarcer by the day). But those resources aren’t actually gone. “We” got them back. (I believe it was counted as deficit reduction.) “We” have permanently lost money on the auto-industry bailout and on Fannie Mae and Freddie Mac, but no one really cares about that for some reason.
All of this double-occurred to me when I flipped through the n+1 Occupy! gazette. Doug Henwood, who I think knows better, somewhat misleadingly speaks of the Fed “hand[ing] out massive amounts of money to the major banks with no strings attached.” (Hey, wait a minute, wasn’t all that lending collateralized? Wasn’t it all repaid?) “You could say the same for the TARP bailout — massive giveaways with no accountability or restrictions.” “Giveaways”? Kind of. But if you give it back a year later, is it really still a giveaway?
The perverse thing about this is that the Obama administration feels like it can’t tout the TARP repayment as a policy victory because then people will just remember the bailouts in the first place and get angry. There’s a desire to tout the auto-industry bailout as a policy victory, which is probably defensible in some ways, but, like, that actually did throw money down a dark hole. So.
