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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75777  
Subject: Re: UK, NL, AUS ban mutual fund commissions Date: 6/25/2013 4:41 PM
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Well, according to how I read the chart at the link you provided, the total amount lent was $456.6 and the total amount paid back was 417.2 leaving a shortfall on TARP of the difference.

Not really. Since you referred to 'banksters' (How much was spent by the US government (and, ultimately, by many other governments) to bail the banksters out of those messes?), I provided the link to the TARP program for the banks, not the link to the overall TARP program. TARP made money on the money it provided to the banks. The money that TARP has lost so far has been mostly due to the bailout provided to automakers, not 'banksters'.

Secondly, TARP wasn't the only program.

Well, it was the most talked about program, and the one that I was able to find data on. Do you have data for the other programs? I was just trying to provide an answer to your question of how much the US government has lost bailing out 'banksters'. And at least for TARP, the answer is, the US government made money bailing out 'banksters'. I would be interested in seeing other data.

Thirdly, in order for Bear Sterns (and possibly Lehman) to be resolved, the Federal Government had to take over their wagers gone awry as well.

Well, the Bear Stearns 'wagers gone awry' formed the basis of Maiden Lane, LLC, which also made, not lost, money: http://www.newyorkfed.org/markets/maidenlane.html

Purpose: ML LLC was created to facilitate the merger of JP Morgan Chase & Co. (JPMC) and Bear Stearns Companies, Inc. (Bear Stearns) by purchasing approximately $30 billion in assets from the mortgage desk at Bear Stearns.

Terms: The New York Fed lent ML LLC approximately $28.82 billion. The loan has a 10-year term and accrues interest at the primary credit rate. JPMC lent ML LLC approximately $1.15 billion. The JPMC loan has a 10-year term and accrues interest at the primary credit rate plus 450 basis points.

Investment Objective: Repay the New York Fed’s senior loan (including principal and interest), while refraining from disturbing general financial market conditions. Following a 2-year reinvestment period, monthly loan repayment commenced in July 2010.

On June 14, 2012, ML LLC repaid the loan made by the New York Fed, with interest. Proceeds from future sales of ML LLC assets will be used to repay the subordinated loan extended by JPMorgan Chase & Co., after which the New York Fed will receive all residual profits.


As far as the US government supporting Lehman, everything that I found indicated that the refusal of the US government to provide support was a signficant reason why Lehman ending up declaring BK, so I'd be interested in seeing any information that you had to support your theory that Lehman was provided support by the US government.

Next, I see there no accounting for how much support we rendered to overseas banking entities.

Well, TARP did provide support to some overseas banking entities, and, net/net, TARP bank programs made money for the US government. Additionally, Maiden Lane transactions also paid off some obligations to overseas banking entities, but again, made money for the US government. If you want to provide data on other programs where the US government lost money by providing support to overseas banking entities, I'd be interested in seeing that, too.

Then pressure was put on the FASB to retract the rule requiring banks to mark their assets to market, without which repeal all of the biggest would have been visibly as insolvent as, in reality, they actually were.

I fail to see how FASB relaxation of mark to market rules caused the US government to spend money bailing out 'banksters'. If anything, by allowing the banks to keep the charade up, the US government didn't have to spend money bailing additional banks out.

Finally over the last 6 years the banks have borrowed at the Fed window at .25% and lent it right back to the Government at up to 2%. Some may not call that a bailout but if it looks like a duck....

I don't disagree that, actually, for even longer than the last 6 years, the Fed has lent money to banks for short terms at a rate lower than the banks lend money out at for long terms, including lending money to the Federal government. After all, one of the purposes of the Fed is to facilitate liquidity in the monetary system. And with a non-inverted yield curve, short term loans are priced at a lower rate than long term loans. However, based on the data that has been released (by law, reported on a 2 year lag, starting with Q3 2010) on the borrowings from the Fed window http://www.federalreserve.gov/newsevents/reform_discount_win... the amount lent out using the discount window is almost all to small banks/credit unions, is very short term (averaging around 4 days), and is generally less than $10 million at a time. Additionally, while there were some loans made at 0.25%, the majority of loans were at 0.75%, or higher, in the data provided.

Assuming that the money was able to be lent out at 2% for the entire term of the loan, the total interest that could have been earned for the quarters reported so far was:

2010 Q3 - $386k
2010 Q4 - $364k
2011 Q1 - $ 96k

Based on those dollar figures, I'm not even really seeing a brand new hatchling, much less a full grown duck.

AJ
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