12.07
My God, those evil Wall Street bankers.
First they bought our politicians, then they stole our moneys.
That $700 billion that went to Wall Street, that’s what everyone’s so angry about, right? It proves how the government is (a) socialist (b) sold out to corporate interests* (*choose one based on preexisting ideological preconceptions). Oh, the gross injustice of it all, how evil bankers just up and stole $700 bill-…
…Wait – what’s that you say? We’re getting it all back?
That’s what the New York Times is reporting anyway. With the economy recovering faster than anticipated, the Treasury has revised down its losses from the bailout program – to the tune of 300 billion.
The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. That figure anticipated more financial troubles requiring intervention.
It now looks like the banks will be able to pay back all the money loaned to them sooner rather than later, with interest. Even taking into account losses due to additional business loans and actions such as the bailout of GM, the most optimistic scenario has the government recovering 90% of the bailout money.
This, of course, is a vastly different storyline than the one understood by detractors on both the right and the left. Of course, it doesn’t mean that bankers aren’t slimey bastards, or that certain Wall Street firms didn’t game the system thanks to their connections. We should all keep in mind too that in the course of the crisis, some firms such as Leyman disappeared entirely, and others were able to consolidate their position and reap huge profits in the face of their rivals’ weakness.
The other caveat is that this is only part of the financial rescue effort, and doesn’t cover the actions undertaken by Bernanke and co. As the New York Times notes, the Fed “still holds a trillion-dollar portfolio of mortgage-backed securities whose market value is unknown.”
Nonetheless, I think it shows how conventional wisdom can get ahead of actual facts. Most people I know had written that money off, and weren’t aware of the fact that it was all going to be repaid, or that it could happen relatively quickly.
It’s also a sign of how quickly the economy has gone from teetering on the brink of Depression, to merely plodding along in recession territory, with job numbers showing some tentative signs of improvement. Sure, we can gripe about job numbers got picking up more quickly, but let’s not forget that just 10 months ago we were actively debating whether Bank of America and Citibank should be nationalized or not.
According to the report, the President has indicated, smartly I think, that he is willing to designate a portion of the cash ($100 billion or more) to job creation, and then use the rest to pay down the deficit, which I think we can all agree is necessary at this point.
More importantly, I think the Democrats would be foolish not to try and reap some deserved political advantage out of this (relative) good news. Just as people erroneously conflated the stimulus and the bailout and blamed Obama for both, trumpeting the news that 90% of the bailout is getting paid back – soon – could significantly change the political narrative heading into next year’s election.
If I were the Obama White House, I’d be screaming it from the rooftops.
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