Although the price tag on the Treasury Department's Troubled Asset Relief Program is $700 billion, the full amount that the government has invested in its rescue effort for struggling financial institutions appears to be closer to $2.5 trillion.
Bloomberg L.P., the parent company of Bloomberg News, said last week that it filed a lawsuit seeking information on the collateral that a group of banks pledged for some $2 trillion in emergency loans from the Federal Reserve.
Bloomberg asked a federal court in
Bloomberg filed the suit after the Federal Reserve said that it would deny Bloomberg's request for the information under the Freedom of Information Act.
The financial firms that were eligible for some of the loans through the Federal Reserve included many of the same firms that split $125 billion in the first round of the Treasury Department's relief program.
The Treasury Department has approved more than $170 billion in capital injections for banks that applied to sell preferred stock to the government. It has about $80 billion remaining for additional participants, who must submit their applications by Friday.
The Treasury Department announced Monday that it also is investing $40 billion in the preferred shares of American International Group Inc. The financing it part of a new plan to salvage an earlier rescue plan that was going awry.
The revised plan brings the total assistance that AIG has received from the Federal Reserve and the Treasury Department to $150 billion.
Bloomberg reported that the Federal Reserve made its $2 trillion in emergency loans under 11 different programs, eight of which were created in the past 15 months.
The Treasury Department also made a little-noticed change to tax policy that experts say could save banks that merge with other banks as much as $140 billion in taxes. One of the biggest beneficiaries of the change would be Wells Fargo & Co., which is absorbing Wachovia Corp. in a deal spurred by the Federal Deposit Insurance Corp.'s concerns about Wachovia's solvency. According to an article Sunday in the Washington Post, Wells Fargo stands to save about $25 billion in taxes.
Adding together the $170 billion that the Treasury Department has currently agreed to provide banks in additional capital, the $150 billion that the Treasury Department and the Federal Reserve are providing to AIG and the $2 trillion that the Federal Reserve has provided banks in emergency loans brings the total assistance to $2.32 trillion.
If the estimated savings from the new tax breaks are included, the assistance would climb to $2.46 trillion. That total does not include other measures not focused directly on banks, such as Treasury Department's $200 billion in support for Fannie Mae and Freddie Mac, and the Federal Housing Administration's $300 billion HOPE for Homeowners program.
“A Modest Proposal”?
Regarding the "Bailout", the correct thing to do would be to declare derivatives null and void. AIG is heavily loaded with these betting slips. Derivatives and "Credit Default Swaps" are nothing but fancy terms used to obfuscate the reality that these are nothing but bets. We are the casino and our "guests" have figured out how to scam us and we're letting them. Any other casino would escort these thieves out, which is what we should do by declaring them (derivatives) null and void. There is 1,000 TRILLION, or 1 QUADRILLION in derivatives outstanding - no one can or should attempt to begin to bail out that kind of money - it is just one big black financial hole. Check out http://www.globalresearch.ca/index.php?context=va&aid=10265
An alternative would be to have the institutions simply refund the “premiums” or whatever the derivative obfuscating term is…..
I don't understand why the Treasury is so protective of the data, the public needs to know. While the big banks are enjoying a nice winfall courtesy of the taxpayer's dollars the legitimate home owners of America is suffering. Each week the value of our home goes down and nothing happening is really slowing that down. Why is it that the middle class is made to suffer while the rich gets bailed out? My home has lost over 50% of it's value and about 20% of the owners in my neighborhood (Beaumont, CA) have had their homes foreclosed on! See for yourself the prices are dropping like a falling knife!
http://www.homepricetrend.com
SOME NEW MATHS FOR UNDERSTANDING WHAT WENT WRONG AT AIG
It is becoming increasingly apparent from the scale of the revised AIG rescue plan announced yesterday, and the fact that there has still been no real “pricing” of the really toxic stuff by the TARP, that the financial engineers that created this monumental disaster were either unintentionally reckless beyond belief or, if the obfuscation was intentional, this must surely be counted as the largest theft ever perpetrated and taxpayers should be demanding ongoing investigations leading to criminal prosecutions.
If we just focus on the more benign interpretation (i.e. that it was not malicious intention) one is forced to the conclusion that the mathematics that underlies all of the risk modeling that went into these structured products is absolutely flawed. Not just slightly wrong but fundamentally mis-conceived.
The saddest part of the whole mess is the hubris and arrogance of the people that signed off on the assessments made by the “quants” of the likelihood of defaults and the probability distributions of financial accidents. Extreme events in time series data are of a completely different complexion to the tails of a normal distribution.
If risk managers really insist on finding a bit of maths that can account for the likelihood of critical events taking place – such as collapses in real estate prices and implosions of liquidity – a better place to look would be the predator-prey modeling which has been conducted mainly in relation to bio and eco-systems.
Predators eventually run out of sufficient prey and their populations decline substantially until there is a chance for the supply of prey to be replenished. At such time the predators can get back to business. This modeling gives rise to oscillations in the ratio of predators to prey and right now we are in a bear phase for the predators. One slight modification to the model needs to be made for the government rescue plans etc which will perhaps keep those marginal survivors from the last predation on a life support system long enough so that they can limp off and become ensnared in some new financially engineered scam.
We are in for a world of trouble. This clip is interesting, talks about rising food costs. Ouch
http://www.gotoguy.com/?p=526
Your house has lost 50 % of it's value? It's by design. What is capitalism? Isn't capitalism like a game of poker? One or two people end up with all the chips because they are the most savvy or most intelligent of the group. If you had a buddy who had inside scoop on a stock and you could make a lot of money on it, are you saying that you would not take him on his offer? So why should we expect our Govt officials to be any different? If they can rig the game against us legally, shouldn't we expect them to do so? Isn't that the way the game is played? I'm just shocked that you guys think that these guys in the Govt should give us middle class folks any breaks? Why? That's how the game has been played for a long time. That is what capitalism is. Dog eat dog. It's a game of advantages and those who can get the biggest advantages, wins. It was nice while it lasted. See you in the soup line.