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US to make profit from bailouts

Frolicking Dinosaurs

Frolicking Dinosaurs

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The US will make a profit from bailing out the nation's banks and car makers at the height of the financial crisis, the Treasury Department has said. The bank bailouts may result in a return of $2bn (£1.3bn), the Treasury said in its latest projections for the government's response to the crisis. And the recovering auto industry has added 230,000 jobs as a result.

The recession was the worst since the Great Depression and $19.2tn of wealth was wiped out, it said. "Although the economy is getting stronger, we have a long way to go to fully repair the damage the crisis has left behind," the Treasury said.

The vast majority of the projected returns - more than $179bn - come from the Federal Reserve's huge investments and loans to banks. The Fed and the Treasury together invested $182bn just to save insurance giant AIG. In terms of the bank bailouts, the much-maligned Troubled Asset Relief Program (Tarp) that provided money to more than 700 banks has already realized a $19bn profit.
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BBC News - US to make profit from bailouts, Treasury says

This is a feather in both GWB and Obama's caps.
 
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Thus proving the old adage: You have to have money to make money.

"Son, I don't have a money tree in the back yard". "Yes you do daddy". "You work for the Treasury Department".
 
FactCheck.org : General Motors’ Debt

As for Treasury’s equity stake, worth $40 billion-plus, the nonpartisan Congressional Budget Office has said the Treasury won’t fully recoup that money. The total automaker bailout, including TARP money given to Chrysler, CBO estimates, will cost taxpayers about $34 billion.
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What is happening is Treasury is not counting the investment that was turned into stock within the company. Without some more infomartion like the actual balance sheets from both Treasury and Chrysler, I dunno.

Im not as versant in the TARP bailout capital and following the money so I dont know how factual those statements are.
 
Even if true, the bailouts are inexcusable.

There is no doubt that the government could make business deals. Like in the market, some are successful and some aren't.

Yet do we have a government for the purpose of being a business with taxpayers as the stockholders?
 
If this is such a great money-making proposition, why didn't we bail out Kodak this year?
 
Bigfoot 88 said:
Even if true, the bailouts are inexcusable.

There is no doubt that the government could make business deals. Like in the market, some are successful and some aren't.

Yet do we have a government for the purpose of being a business with taxpayers as the stockholders?
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No, we have a government for the purpose of helping to ensure we have a safe country with a stable economy.

PerfectStorm said:
If this is such a great money-making proposition, why didn't we bail out Kodak this year?
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Because it's a different company in a different industry with different circumstances and a different economic situation, maybe?
 
PerfectStorm said:
If this is such a great money-making proposition, why didn't we bail out Kodak this year?
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Kodak's importance to the economy on a large scale is miniscule.
 
Hare said:
Kodak's importance to the economy on a large scale is miniscule.
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Kodak is dying of natural causes. There isn't much money in film or film processing these days. OTOH, it's still pretty important to have a banking system.
 
... listens to GOP policy writers heads explode....
 
Frolicking Dinosaurs said:
BBC News - US to make profit from bailouts, Treasury says

This is a feather in both GWB and Obama's caps.
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This is great news for the American taxpayer, whether you are/were pro/anti bailouts or TARPs everyone can agree that seeing some of the money return is a good thing.

However that doesn't end the debate by a long shot, remember that the goal of these programs and actions was NOT to turn a profit for the government, but rather to stabilize an economy on a serious downturn with the potential for worse, not to mention save thousands of jobs at places like GM which would have been lost if it went under.

Plus there is the question of the role of government. Gov't has the potential for tremendous power and influence, but one must always ask themselves how powerful and influential they want government to be. Of course its possible for the gov't to over step its bounds, or do things it perhaps should not do even if it has the legal power to do so, and still accomplish great and wonderful things. But there's no denying that makes a change in the relationship the economy, people, and government have to each other.

While I believe that the government's role is to step in at times of extreme crisis to prevent further crisis, I certainly hope that what should be a temporary solution does not become a permanent one. In other words while I supported the takeover of places like AIG or GM to prevent a domino effect, and to save jobs, I hope the government presence in these companies or others does not become the norm. If one has a leaky pipe the first thing you'll do is find a quick solution to stave off a bigger issue, like putting a bucket down so your floor isn't flooded, while you quickly go prepare and execute a more permanent solution. Right now I consider the gov't presence to be a bucket on the floor, good for the short term but not what I want to see as a permanent solution, and I hope they work with industry and amongst itself to inspect the problem, the joints, bolts, structural integrity of that pipe, fix whatever needs to be fixed and make it stronger. Then we can take the bucket away.

So right now, excellent news on potentially turning a good profit, but more important is where the government is going to go with this into the future and how will this change our economy.
 
OpportunityCost said:
FactCheck.org : General Motors’ Debt
What is happening is Treasury is not counting the investment that was turned into stock within the company. Without some more information like the actual balance sheets from both Treasury and Chrysler, I dunno.

Im not as versant in the TARP bailout capital and following the money so I dont know how factual those statements are.
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The article says the auto bailouts will not result in a surplus, but did save a lot of jobs and the auto industry from collapse. The saved auto-workers taxes and corporate taxes may actually mean a financial gain from the expenditure.
 
Deuce said:
No, we have a government for the purpose of helping to ensure we have a safe country with a stable economy.
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That sounds nice.

However the federal government has no authority to bail out private companies that made poor business decisions. To do so using taxpayer money is also immoral.
 
PerfectStorm said:
I guess the unions don't get a benefit from those paychecks.
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I'm concerned about the solvency of my country's treasury and could care less who else benefits. I'll leave the hating and clouding the issue to your ilk. I know it galls the 'anybody but Obama' conservatives to see the Bush-Obama bailouts actually worked and paid for themselves, but facts are facts.
 
Frolicking Dinosaurs said:
The article says the auto bailouts will not result in a surplus, but did save a lot of jobs and the auto industry from collapse. The saved auto-workers taxes and corporate taxes may actually mean a financial gain from the expenditure.
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Agree that the workers jobs and taxable income was saved. Disagree that the corporate tax income was saved. With the tax code the way it is, the losses will be a tax shelter for years to come.
 
Bigfoot 88 said:
That sounds nice.

However the federal government has no authority to bail out private companies that made poor business decisions. To do so using taxpayer money is also immoral.
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So, if you were employed by a company that would have failed if it were not for the bail outs of other companies you should loose your job to stay moral. Please explain your priorities. And explain why the government doesn't have the authority and have that also cover actions that supported WWII.
 
Bigfoot 88 said:
That sounds nice.

However the federal government has no authority to bail out private companies that made poor business decisions. To do so using taxpayer money is also immoral.
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The issue has nothing to do with 'morality'. It has to do with the thousands of middle class workers that would have been out of work. This country runs on the middle class. Without their spending, the entire economy shuts down. The middle class has slowed down consumption and our economy is struggling. Can you imagine how much worse it would have been with a couple hundred thousand more unemployed?

Now, if you want to talk about penalties for the executives that caused the crisis..... That is for a different thread, but I would be very supportive of that!
 
Auto industry wouldn't need bailouts if there were tariffs in place.

2 billion whole dollars in like 5 years. WOW, amazing. The US government would be making that type of "profit" every day if there were tariffs in place.
 
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Matt Foley said:
Auto industry wouldn't need bailouts if there were tariffs in place.

2 billion whole dollars in like 5 years. WOW, amazing. The US government would be making that type of "profit" every day if there were tariffs in place.
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Now this is just silly. Why do you think Detriot had so many problems in the first place? Because they were unable to compete. Placing tariffs that would make it so they didnt have to compete would simply make the collapse even steeper when it occurred, not to mention they wouldnt have improved quality and value as quickly without global competition.
 
I wonder how many people are going to celebrate at this news when they hoped it would fail...under Bush or Obama.
 
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