TARP pricetag updated to $25 billion
A Bank of America customer uses an ATM at a branch in Hollywood on October 19, 2010. Two top US banks are moving on the offensive as they struggle to put the foreclosures quagmire behind them, but the scandal continues to menace the financial sector. Bank of America, the country's largest bank by assets, said it was lifting freezes on more than 100,000 foreclosure cases in 23 states, insisting it had not found any flaws in their processing. Bank of America, which had announced a nationwide moratorium on foreclosures to review its paperwork on October 8, nevertheless said the freeze will stay in place for now in the remaining 27 states.
TEXT OF INTERVIEW
JEREMY HOBSON: We have an updated price tag for the $700 billion Troubled Asset Relief Program that expired in October. According to the non-partisan Congressional budget office, the total cost to the taxpayer will be $25 billion. Not peanuts, but far less than the original price tag. And less than government analysts predicted six months ago.
Marketplace's Gregory Warner joins me now live with more on this story. Good morning, Gregory.
GREGORY WARNER: Good morning.
HOBSON: So what's changed here?
GREGORY WARNER: You remember General Motors went public earlier this month and it shed majority ownership, AIG sold off billions of dollars of assets, plus you know, home owners did not sign up to take advantage of Federal programs to avoid foreclosure, so a lot of that $700 billion authorized by Congress never got used.
HOBSON: And of course there was the money that went to the banks, which was a large part of that as well. So, we hear now that the bailouts going to cost taxpayers some $25 billion according to this estimate. It was a very unpopular program. Do you think this low price tag is going to answer some of the critics?
WARNER: I mean, not really. Because, yes many economists would argue that had we not had that infusion of cash to stabilize the banks our economy would be far worse. But the bailout was just one of a bunch of government programs propping up Wall Street. A lot of real cost was shifted to those other programs that have gotten less public attention. For example, the bailout of Fannie Freddie. The government purchased hundreds of billions of dollars of bad homes loans which continue to prop up the housing market and kept banks from having a wave of defaulted home loans on their books. That's allowed those banks to pay back the bailout money it's one reason why the price tag this morning looks as good as it does.
HOBSON: Marketplace's Gregory Warner, we'll be watching to see if that price tag comes down any further. Thanks so much for your help this morning.
WARNER: Thanks Jeremy.