US claims profit on bank bailout program

© AFP/File Saul Loeb

AFP

WASHINGTON (AFP) – The United States said Wednesday its bank bailouts had earned a profit, 30 months after the Treasury committed hundreds of billions of dollars to rescue financial institutions as the economy plunged into crisis.

After enduring deep criticism over the use of taxpayer funds to rescue banks run aground by billionaire executives, the Treasury said bank repayments to the Troubled Asset Relief Program had brought in $251 billion, compared to outlays of $245 billion.

“While our overriding objective with TARP was to break the back of the financial crisis and save American jobs, the fact that our investment in banks has also delivered a significant profit for taxpayers is a welcome development,” said Treasury Secretary Tim Geithner.

“Today is an important milestone in our efforts to recover taxpayer dollars as we continue winding down TARP,” he said in a statement.

The announcement came after three banks repaid $7.38 billion in funds supplied by the program at the height of the crisis, together with $25.9 million in dividends.

Geithner predicted another $20 billion in profits from the bank support programs.

TARP was initiated by the administration of former president George W. Bush in late 2008 as the US financial sector faced a meltdown.

The goal was “to help stop a financial panic and prevent a second Great Depression,” the Treasury said Wednesday.

But it sparked a nationwide debate that continues to resound over whether public funds should be used to rescue private businesses, even large ones whose failure could damage the entire system.

Initially funded with $700 billion, the program in execution was roughly half that size. Aside from the bank rescues, $40 billion were used to prop up insurer AIG, $21 billion for failing automakers, and another $40 billion used to buy stock in Bank of America and Citigroup.

TARP did not include the government’s rescue of semi-government mortgage giants Fannie Mae and Freddie Mac, which is expected to lose the government and taxpayers $73 billion, according to Treasury data.

The AIG bailout could also rack up a loss of $28.1 billion, it said.

© AFP — Published at Activist Post with license

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