Originally published at: https://boingboing.net/2019/10/03/foreclosures-ahoy.html
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“It’s only money.”
“I wouldn’t call twenty billion ‘only money’!”
So the Treasury got back all the money it spent on the bailout, and made a $120 billion profit? That seems a pretty successful result by any measure.
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I had no idea the bailout was profitable.
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The lesson seems to be that if you hand reckless bankers a no-strings bailout they’ll eventually repay it with interest, but will greatly enrich themselves with bonuses from those funds despite having crashed the global economy with their dangerously risky games. Funny how the usual Libertarian cry of “moral hazard” goes silent when bankers and corporate executives are involved.
11 years later, we see: thousands of businesses gone because banks for years; wouldn’t use the funds for the intended purpose of issuing more commerical paper; millions of homes sitting empty and derelict because people walked away in desparation and because financial services corporations don’t live in residential real estate; a half-arsed bipartisan re-imposition of regulation (Dodd-Frank) that won’t seriously curb the bankers when they inevitably find their next CDO-like craze (heck, CDOs are back under a bunch of different names); and an economic recovery that mainly benefited the most affluent 20% of American society, at best.
But yeah, most of the banks paid back the TARP funds with interest to the state, just like they expect holders of consumer debt to do. Give them a cookie!
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They money spent on the bailout was recovered, but it probably didn’t make a profit. Consider the revenue fallout from all the businesses (and people!) who failed financially because of the crash.
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There was technically profit, mainly in the form of dividends paid out by the banks and the government selling them back their stock warrants. But yes, it was outweighed by the (on-going) damage to the economy as a whole. Also, this wasn’t a “business” the government wanted to be in, so it’s not really a model that should be repeated regularly. Plus, however much the state profited over the past 11 years, rest assured that the banks profited at an even greater rate in the same time period.
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Lost the milking cow, destroyed half the village, but still came out with riches and a magic harp, amirite?
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Stock buybacks for everyone, hooray
Neil Barofsky’s book, “Bailout” is your indispensable story for this one. Barofsky was the “SIGTARP” - special inspector general of the program - and makes clear what the priorities were, for executive and congress both.
Geithner comes in for particular scorn from first-person data on his dismissive, uninterested attitude towards bailouts of mortgage clients, his focus on the big banks.
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biggest scam in history - fading into history, we’ll never see those fuckers go to jail now even though we know exactly who they are
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