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Did the US gov really make any money on it, or did it pay the banks through another channel (such as non-returnable Fed-printed loans) so the banks can "give ba

by mtgx 7y ago

Did the US gov really make any money on it, or did it pay the banks through another channel (such as non-returnable Fed-printed loans) so the banks can "give back the TARP money." (a PR win for both the gov and the banks, but still a net loss for the public). I may have read something on this a few years back.

oh_sigh 7y ago
There's also a question of why the government wouldn't continually try to maintain this revenue stream if they were indeed making profits, as opposed to only using it as a last ditch effort to contain widespread damage?
- bobcostas55 7y ago
  Because there aren't any insolvent-but-otherwise-fine banks around?
  - oh_sigh 7y ago
    So is the argument that the bailout was zero-sum, but the government came out ahead(and the banks lost), or was it value producing to bail the banks out?
    - wmil 7y ago
      I think the argument is that the government bailout was much simpler than having each bank go through a bankruptcy negotiations with their various creditors. Many of the debtees probably came out behind what they could have negotiated, but there was a net gain by avoiding all of that work to negotiate.
    - rayiner 7y ago
      The theory of bailouts is that they are value-destruction-avoiding, like bankruptcy restructuring. The banks lost a lot of money on the mortgage backed securities, but lost much less than they would have had those assets been sold at fire sale. The government came out slightly ahead; it got a part of what value wasn’t destroyed in a catastrophic unwinding of the banks.
  - salawat 7y ago
    How can a bank be insolvent, but otherwise fine? That seems an oxymoron to me. Like saying of a company that it's fine because everyone came to work, but the company can't pay anyone. That is not fine.
    - rumanator 7y ago
      > How can a bank be insolvent, but otherwise fine? They may owe a lot to a specific creditor (or group of creditors) but otherwise have a sound, profitable business.
nerdponx 7y ago
Not sure why you're being downvoted, the US didn't really make money: https://www.nationalreview.com/2015/01/overselling-tarp-myth-15-billion-profit-matt-palumbo/ https://www.nationalreview.com/2015/01/overselling-tarp-myth... Hence my "kind of"

by mtgx 7y ago

oh_sigh 7y ago

There's also a question of why the government wouldn't continually try to maintain this revenue stream if they were indeed making profits, as opposed to only using it as a last ditch effort to contain widespread damage?

bobcostas55 7y ago
Because there aren't any insolvent-but-otherwise-fine banks around?
- oh_sigh 7y ago
  So is the argument that the bailout was zero-sum, but the government came out ahead(and the banks lost), or was it value producing to bail the banks out?
  - wmil 7y ago
    I think the argument is that the government bailout was much simpler than having each bank go through a bankruptcy negotiations with their various creditors. Many of the debtees probably came out behind what they could have negotiated, but there was a net gain by avoiding all of that work to negotiate.
  - rayiner 7y ago
    The theory of bailouts is that they are value-destruction-avoiding, like bankruptcy restructuring. The banks lost a lot of money on the mortgage backed securities, but lost much less than they would have had those assets been sold at fire sale. The government came out slightly ahead; it got a part of what value wasn’t destroyed in a catastrophic unwinding of the banks.
- salawat 7y ago
  How can a bank be insolvent, but otherwise fine? That seems an oxymoron to me. Like saying of a company that it's fine because everyone came to work, but the company can't pay anyone. That is not fine.
  - rumanator 7y ago
    > How can a bank be insolvent, but otherwise fine? They may owe a lot to a specific creditor (or group of creditors) but otherwise have a sound, profitable business.

nerdponx 7y ago

Not sure why you're being downvoted, the US didn't really make money: https://www.nationalreview.com/2015/01/overselling-tarp-myth-15-billion-profit-matt-palumbo/ https://www.nationalreview.com/2015/01/overselling-tarp-myth... Hence my "kind of"