Bailouts can be good business, according to the U.S. Treasury Department, which has made about $11 billion in profit on the controversial Troubled Asset Relief Program and stands to gain billions more as loans are repaid and investments sold off.
The U.S. Treasury on Monday released a year-end accounting of TARP, one of the programs initiated under George W. Bush to help blunt the effects of the financial crisis in 2008. The program poured some $421.9 billion into the economy through loans and stock purchases of everything from banks to automakers. At year-end 2013, Treasury had recovered $432.8 billion.
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According to the Treasury Department’s accounting, the support delivered to the credit markets, in the form of loans meant to ease the terms on which banks would lend to consumers, returned $23.5 billion on $19.1 billion disbursed, or 126.3 percent.
In dollar terms, it was Treasury’s loans to the banking industry that returned the highest profit, with $245.1 billion in disbursements returning $273.2 billion in repayments for a profit of $28.1 billion, or 111.4 percent.
In investment terms, the auto industry bailout has been a net loss for taxpayers to date, with $79.7 billion disbursed and $63.1 billion recovered. However, the program’s preservation of major auto companies, including General Motors, contributed to the addition of 370,000 jobs to the U.S. economy.
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Interestingly, the much-derided bailout of insurance giant AIG, wound up being profitable to the Treasury as well. Treasury paid out $67.8 billion to support the troubled insurer – which earned public scorn by paying bonuses to executives in the midst of the crisis – and to date has recouped $72.9 billion, or 107.3 percent of its total investment.
Follow Rob Garver on Twitter @rrgarver
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