4 ms·

and the govt made a profit from TARP. I don't want the US government to be driven by a profit motive any more than it already is...

sfblah 4y ago
Just jumping in to point out that to make the profit from TARP, the government had to distort the economy in ways that won’t be fully understood for maybe 30 more years.
- lisasays 4y ago
  Yeah, I don't get this "It didn't cost the taxpayers a cent, so really it's all good, man, and not really a bailout" line that some people keep putting out, at all.
boh 4y ago
They are not profiting in the SVB bailout. The available SVB assets aren't increasing in value unless interest rates go back to zero.
- larkost 4y ago
  The assets do not have to increase in value, the face value on them is enough (if what I am reading is right), but that is if you hold the bonds until maturity. SVB's problem was that suddenly they could not wait for maturity their depositors were asking for their money right now. Since most of the money is in treasury bonds, the government can either wait until then, or maybe nullify the bonds that are now in their hands, since it is now the government owing the government money (there is probably some complexity there, but I don't know my way though it). In the mean time the depositors' money needs to come out of the FDIC, and that is probably going to increase costs for banks (and thus their consumers), until things can be worked out.
TuringNYC 4y ago
>> and the govt made a profit from TARP. TARP had three players: TARP Fund: via The US Government (fiscal), POMO/QEx: via The Fed (monetary), and The Banks (those bailed out) TARP "made a profit" by the Fed printing money and buying assets at way above market value from the banks. It didnt cost anything because we just printed the money, but there was a cost...inflation. We just spread the cost secretly to everyone. Real impacts of printing money: Houses jumping in value by 40 or 50%, meanwhile: https://www.costar.com/article/266860380/most-us-households-cant-afford-a-median-priced-home https://www.costar.com/article/266860380/most-us-households-... Most US Households Can't Afford a Median-Priced Home https://www.nahb.org/blog/2022/03/36-million-households-cant-afford-a-150000-home/ https://www.nahb.org/blog/2022/03/36-million-households-cant... "36 Million Households Can’t Afford a $150,000 Home"
qwerpy 4y ago
> govt made a profit from TARP That's like selling your used car for a "profit" during the recent supply chain issues caused by the pandemic. Sure, you might have gotten more dollars from the sale than you did when you purchased it. But those dollars are worth a lot less now, and you would not be able to repurchase an equivalent car with those dollars. The TARP profit line is how they deflect some of the outrage from yet another bank bailout. "See, it didn't cost you, the taxpayer, anything!".

sfblah 4y ago

Just jumping in to point out that to make the profit from TARP, the government had to distort the economy in ways that won’t be fully understood for maybe 30 more years.

lisasays 4y ago
Yeah, I don't get this "It didn't cost the taxpayers a cent, so really it's all good, man, and not really a bailout" line that some people keep putting out, at all.

boh 4y ago

They are not profiting in the SVB bailout. The available SVB assets aren't increasing in value unless interest rates go back to zero.

larkost 4y ago
The assets do not have to increase in value, the face value on them is enough (if what I am reading is right), but that is if you hold the bonds until maturity. SVB's problem was that suddenly they could not wait for maturity their depositors were asking for their money right now. Since most of the money is in treasury bonds, the government can either wait until then, or maybe nullify the bonds that are now in their hands, since it is now the government owing the government money (there is probably some complexity there, but I don't know my way though it). In the mean time the depositors' money needs to come out of the FDIC, and that is probably going to increase costs for banks (and thus their consumers), until things can be worked out.

TuringNYC 4y ago

>> and the govt made a profit from TARP. TARP had three players: TARP Fund: via The US Government (fiscal), POMO/QEx: via The Fed (monetary), and The Banks (those bailed out) TARP "made a profit" by the Fed printing money and buying assets at way above market value from the banks. It didnt cost anything because we just printed the money, but there was a cost...inflation. We just spread the cost secretly to everyone. Real impacts of printing money: Houses jumping in value by 40 or 50%, meanwhile: https://www.costar.com/article/266860380/most-us-households-cant-afford-a-median-priced-home https://www.costar.com/article/266860380/most-us-households-... Most US Households Can't Afford a Median-Priced Home https://www.nahb.org/blog/2022/03/36-million-households-cant-afford-a-150000-home/ https://www.nahb.org/blog/2022/03/36-million-households-cant... "36 Million Households Can’t Afford a $150,000 Home"

qwerpy 4y ago

> govt made a profit from TARP That's like selling your used car for a "profit" during the recent supply chain issues caused by the pandemic. Sure, you might have gotten more dollars from the sale than you did when you purchased it. But those dollars are worth a lot less now, and you would not be able to repurchase an equivalent car with those dollars. The TARP profit line is how they deflect some of the outrage from yet another bank bailout. "See, it didn't cost you, the taxpayer, anything!".