Far be it from me to defend banksters, but…..
The new estimate said the biggest losses will occur from the government’s support of mortgage companies Fannie Mae and Freddie Mac. That loss was put at $85 billion followed by a loss of $49 billion from providing help to homeowners facing the threat of losing their homes through foreclosures.
Geithner’s letter estimated that the government would lose $48 billion through the support provided to insurance giant American International Group and another $28 billion would be lost through the billions of dollars in assistance provided to General Motors, Chrysler and their auto financing arms.
The biggest offset to those losses will be earnings of $115 billion that the administration expects the Federal Reserve to realize from the extraordinary assistance it has given to provide liquidity to the financial system.
Even if you subtract off the $48 billion to AIG (as you should) from the $115 billion, that leaves a $67 billion profit on the bank part of TARP. Now, I don’t know how much of the Fannie and Freddie money in effect went to the banks, so this may be complicated.
But the notion that $600 billion went down the drain on banks is ludicrous and it’s time for that meme (weirdly enough, it’s now mostly a Republican meme) to die.