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Pay No Attention to What’s Behind the TARP


Keeping in form, the Failed Obama Administration™ touts benefits while ignoring costs:

Both Obama and the Treasury Department keep talking up the TARP as if it is a money maker for taxpayers, when nothing could be further from the truth. Obama tried this stunt in his anniversary of Lehman speech, and the Treasury continues with the theme, of implying that results for the firms that paid back are representative of what the final results would be.

If this logic were generally true, that would mean subprime bonds were a good investment too. After all, most borrowers did make good on their mortgages. A late September Moodys mortgage survey that a reader sent me estimated that total losses on subprime RMBS will be about 26%, which means that 74% were money good.

The problem with the Treasury/Obama three card monte is that the strongest TARP are the ones that paid off first. Things can only go downhill from here. Do you expect AIG to repay the TARP in full? Or the auto companies?

Nope. Chrysler is walking away with $4B of our money. Add in the money GM set on fire and the wad AIG wished into the cornfield, and John Q. Public is eating a $60B loss. And these projections are made with the illusion that the broad economy is stabilizing toward recovery. Take that $60B as a minimum.