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Wait, WTF... At the end: > Overall, the auto bailout was the one big money loser for TARP. Even with the Ally sale, taxpayers lost about $9.2 billion. Do the

Wait, WTF... At the end: > Overall, the auto bailout was the one big money loser for TARP. Even with the Ally sale, taxpayers lost about $9.2 billion. Do they mean it could have been 15.3 + 9.2 billion in the end for the total $24.5 billions in profit? I don't think taxpayers lost anything if the program broke even.

philwelch 12y ago
If they bailed out the banks but not the car companies, the treasury would have profited 24.5 billion. If they bailed out the banks and the car companies and the car companies earned money, the treasury would have profited much more. But then, the treasury didn't do the bailout to profit. They did it to short-circuit a potential Great Depression. From that standpoint, it was a success at any price.
waps 12y ago
I think the misunderstanding is that Ally Financial is "part of the auto industry". Yes, really. So here's where the numbers come from : 1) +15.3 billion : auto industry + financial industry which is 0.06% per year, for 3.5% over 6 years 2) -9.2 billion : auto industry 3) +1.3 billion : Ally Financial Therefore: 4) (inferred) -10.5 billion : auto industry - Ally Financial 5) (inferred) +24.5 billion : financial industry TARP First caveat. Given the risk on the troubled assets, this is a pathetically bad return over 6 years. These were the worst of the worst, something everybody else would have demanded something like 13-14% interest per year for in 2008. Second caveat, we all know why the finance industry came out ahead (not necessarily a good publication in this link, just the first reasonable link on Google for this subject) : http://www.financialsense.com/contributors/greg-weldon/stock-market-fed-balance-sheet-correlation http://www.financialsense.com/contributors/greg-weldon/stock... So really, the full story is, $426 billion TARP + $3 Trillion in loans to banks was sufficient to convince the banks to pay $450 billion to the US government. They have not, of course, paid back the 3 trillion, nor are they capable of doing so. Third caveat, a lot of that $3 trillion has gone into stock buybacks, effectively giving the money to investors in S&P 500 companies (especially financials). The idea is that the S&P should continue to increase in value, despite the money flow having stopped (mostly). History teaches though, that when this happens, a more common result is a stock market crash. That doesn't happen until loans aren't free anymore though (currently the FED says rate hike will happen around June). Frankly if you're in a startup, make sure to have a job at Google, Yahoo or Amazon or some large player by the time the rate hikes happen.
- pbreit 12y ago
  0.6% per year. Still pretty bad.
  - mikeyouse 12y ago
    Meh, it's more complex than that since they didn't put in $426B on day one and then get out $450B on the last day, you'd have to weight each investment on its own time frame and run independent returns. Either way, the bailout wasn't set up to make a profit, so it's fairly pointless to judge the returns..
    - gbhn 12y ago
      Except politically if course, where returns were abysmal.

philwelch 12y ago

If they bailed out the banks but not the car companies, the treasury would have profited 24.5 billion. If they bailed out the banks and the car companies and the car companies earned money, the treasury would have profited much more. But then, the treasury didn't do the bailout to profit. They did it to short-circuit a potential Great Depression. From that standpoint, it was a success at any price.

waps 12y ago

I think the misunderstanding is that Ally Financial is "part of the auto industry". Yes, really. So here's where the numbers come from : 1) +15.3 billion : auto industry + financial industry which is 0.06% per year, for 3.5% over 6 years 2) -9.2 billion : auto industry 3) +1.3 billion : Ally Financial Therefore: 4) (inferred) -10.5 billion : auto industry - Ally Financial 5) (inferred) +24.5 billion : financial industry TARP First caveat. Given the risk on the troubled assets, this is a pathetically bad return over 6 years. These were the worst of the worst, something everybody else would have demanded something like 13-14% interest per year for in 2008. Second caveat, we all know why the finance industry came out ahead (not necessarily a good publication in this link, just the first reasonable link on Google for this subject) : http://www.financialsense.com/contributors/greg-weldon/stock-market-fed-balance-sheet-correlation http://www.financialsense.com/contributors/greg-weldon/stock... So really, the full story is, $426 billion TARP + $3 Trillion in loans to banks was sufficient to convince the banks to pay $450 billion to the US government. They have not, of course, paid back the 3 trillion, nor are they capable of doing so. Third caveat, a lot of that $3 trillion has gone into stock buybacks, effectively giving the money to investors in S&P 500 companies (especially financials). The idea is that the S&P should continue to increase in value, despite the money flow having stopped (mostly). History teaches though, that when this happens, a more common result is a stock market crash. That doesn't happen until loans aren't free anymore though (currently the FED says rate hike will happen around June). Frankly if you're in a startup, make sure to have a job at Google, Yahoo or Amazon or some large player by the time the rate hikes happen.

pbreit 12y ago
0.6% per year. Still pretty bad.
- mikeyouse 12y ago
  Meh, it's more complex than that since they didn't put in $426B on day one and then get out $450B on the last day, you'd have to weight each investment on its own time frame and run independent returns. Either way, the bailout wasn't set up to make a profit, so it's fairly pointless to judge the returns..
  - gbhn 12y ago
    Except politically if course, where returns were abysmal.