Bailout losses drop to $89 billion
TEXT OF INTERVIEW
Bob Moon: Forty billion may seem cheap when you consider the pricetag for all the government bailouts in this country. A year ago, the Congressional Budget Office estimated they would end up costing taxpayers $250 billion. That is, $250 billion would never be paid back. Well now, officials are saying that figure has shrunk, big time. For more, we’re joined live from New York by Marketplace’s Jeremy Hobson. Good morning, Jeremy.
Jeremy Hobson: Morning, Bob.
Moon: And what is this new estimated pricetag?
Hobson: Well, officials are telling the Wall Street Journal it’s $89 billion. And that’s when you add up the aid to banks, much of which has already been paid back. The auto companies, which could be free from government support some time this year, good old AIG, the mortgage giants Fannie Mae and Freddie Mac, and all of the extraordinary measures the Federal Reserve has taken to backstop various markets.
Moon: Hmmm. So how did this number come down so far, so fast?
Hobson: Well first of all, the stock market has jumped dramatically. A year ago, you I’m sure will remember, the Dow was around 8,000 today. It may close above 11,000 for the first time since the worst days of the financial crisis. And what that does is it gives the Treasury Department an opportunity to sell its stake in banks like Citigroup at a profit. It also gives companies like GM the ability to go public and bring in some cash and pay back the government. AIG, which many thought would never repay its loans, is selling some of the most valuable pieces of its company, which are fetching now much more money than they would have a year ago. Now $89 billion is only a projection. We do have to remember that the costs of the financial crisis go far beyond the costs of the bailout when you consider all the people who lost their jobs and personal wealth.
Moon: Marketplace’s Jeremy Hobson. Thank you.
Hobson: Thanks Bob.
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