Oh boy.
On location at Occupy Wall Street, CNN's Erin Burnett is perpetuating the myth that government bailouts for banks were profitable for taxpayers.
Here, here, here and here are my previous posts about why this is not true.
On location at Occupy Wall Street, CNN's Erin Burnett is perpetuating the myth that government bailouts for banks were profitable for taxpayers.
Here, here, here and here are my previous posts about why this is not true.
In short, it's misleading to claim that the bank, or Wall Street, portion of the government bailouts (called TARP) is profitable without referencing the trillions in other bailouts provided by the Fed, the ongoing support for Fannie Mae and Freddie Mac (which could cost taxpayers trillions), and other taxpayer support which directly and indirectly bailed out Wall Street beyond just TARP. The reason is that the recipients of the government bailouts are intricately connected. Wall Street had (still has?) vast real estate holdings, so the support provided to Fannie/Freddie and the Fed's purchase or mortgage backed securities were second and third bailouts, respectively, for Wall Street on top of TARP.
Erin, it is fallacious to promote a myopic view that the government got its money back and then some on the TARP tranche of the government bailouts. You need to also look at where taxpayers have not yet received their money back (Fannie/Freddie) or are still exposed (Fed's nearly $3 trillion balance sheet). To do otherwise is to engage in an incomplete, inaccurate and deceptive accounting of the bailouts.
For those interested in more detail line-by-line accounting of the various government bailouts can be viewed here.
For those interested in more detail line-by-line accounting of the various government bailouts can be viewed here.
Erin Burnett dresses like a college sophomore (last Tuesday Jon Stewart showed a clip, calling it her "undercover 21 Jump Street outfit") to go out to Zuccotti Park and slam protesters with a case having all the airtight research backing of a sophomore-level term paper for a macro elective.
ReplyDeleteMake what you will of this testimony from Bernanke. I'm not qualified to unpack his statements.
ReplyDeleteFed Chair Ben Bernanke, before the Senate Banking Committee, July 21, 2010:
"Importantly, our broad-based programs achieved their intended purposes with no loss to taxpayers. All of the loans extended through the multiborrower facilities that have come due have been repaid in full, with interest."
http://mobile.bloomberg.com/news/2010-07-21/senate-testimony-by-bernanke-on-semiannual-monetary-policy-report-text
Edoc,
ReplyDeleteYes, I believe the Federal Rerserve, in conjunction with the Bloomberg FOIA lawsuit, stated that they received full repayment on all emergency lending to U.S. and foreign financial firms. Some details are still fuzzy (e.g., the NY Fed has refused to disclose what collateral they accepted for such loans). But if the Fed was repaid in full on these temporary facilities then that portion of the supplemental Wall St. bailout was benign
One area where the jury is still out on Fed losses, however, is the approximately $1 trillion in mortgage backed securities still on the Federal Reserve's balance sheet. The U.S. housing market has begun a double dip making it far from clear what the final accounting will be here.