Douglas Elliott, fellow at the Brookings Institution
Douglas Elliott, fellow at the Brookings Institution - 
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Kai Ryssdal: We came across some interesting numbers in the financial press today. First, that the Treasury Department's raked in a profit of $4 billion so far from the TARP. That's the bank bailout that's almost a year old now. Also that the Federal Reserve is $14 billion to the good on its bailout-related expenses. That sounded, honestly, high, so we called economist Douglas Elliott. He's a fellow at the Brookings Institution. Doug, good to have you with us.

DOUGLAS ELLIOTT: Thank you, Kai.

Ryssdal: Seems to me what we need is a definition of terms here as we start figuring out how much money the government has gotten back. Are we actually making profits yet, or are we just recouping capital that we've laid out.

ELLIOTT: We're making profits on a few of the deals where it's closed. Some of the strongest banks have been in the position to pay us back. We know on those banks we've made money. What we don't know is whether we'll make or lose money on the rest of the banks.

Ryssdal: And just to get some sense of it, we've still got something like $100 billion, $130 billion of the TARP program outstanding to the banks. Big ones like Citigroup and Bank of America.

ELLIOTT: We have a lot that is still out there. And so, if things go badly we could end up losing money overall. I think the good news here is that not so much that we might make some money, it's that we could be talking about the possibility of making money, when that isn't even why we went into this. The government put the taxpayer money into these banks because we were looking at the abyss. We were afraid back in October that the financial system might crater, and we might have a true Depression instead of just a very severe recession. So the fact that we might break even or even make some money is a fantastic thing.

Ryssdal: Yeah, I saw a great quote the other day from somebody. It said the possibility of making $10 or $20 billion on the TARP, the possibility of averting financial apocalypse -- priceless, really.

ELLIOTT: Well, yes, exactly.

Ryssdal: Let me ask you about the other institution very involved in this whole bailout mechanism, and that's the Federal Reserve. For the $700 billion that the Treasury Department is into the bailout, the Fed has trillions of dollars on the line in loan guarantees and mortgage-backed securities, and all out of those things that it went out there and created new money for. How are we going to know how the Fed is doing?

ELLIOTT: We're not going to know how the Fed is doing for quite some time. And the Fed has taken the less riskier part of the activity. It's true they put more money out there. But each dollar at risk is not at nearly as much risk. But that all said, it all depends on how the markets and the economy develop, but it'll be a while.

Ryssdal: Just to get back to this idea of profits before we let you go. Is it really just silly to be talking about profits at all when we are talking about this bailout?

ELLIOTT: I don't think it's silly to be talking about profits. You just have to focus on the most important thing, which is this program made sense if it's true we were up against the edge, and the program stopped it, which I believe. If you don't believe that, then we shouldn't have done it. That's the key.

Ryssdal: Yeah, but at this point it's a little late, right?

ELLIOTT: Well, just looking in retrospect.

Ryssdal: Yeah, of course. Douglas Elliot from the Brookings Institution. Douglas, thanks a lot for your time.

ELLIOTT: Thank you, Kai.