Fallout: The Financial Crisis

Banks have repaid 99% of TARP

Mitchell Hartman Mar 17, 2011
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Fallout: The Financial Crisis

Banks have repaid 99% of TARP

Mitchell Hartman Mar 17, 2011
HTML EMBED:
COPY

JEREMY HOBSON: To the U.S. banking system now and the money we taxpayers loaned the banks so they could stay afloat during the financial crisis. All told, the Treasury sent $245 billion to banks, and as of yesterday has been paid back $244 billion.

Marketplace’s Mitchell Hartman reports.


MITCHELL HARTMAN: With repayments from a handful of big banks like Fifth Third Bancorp, the Treasury has now recouped 99 percent of the capital it injected into the U.S. banking system through TARP.

CHRIS WHALEN: I see TARP as a failure, even though we’ve gotten all our money back in nominal terms.

Chris Whalen at Institutional Risk Analytics says in order to pay back TARP, banks raised money in the capital markets and juiced their balance sheets.

WHALEN: What I would have preferred was to see the government give them the money, and have them charge it off, in terms of getting rid of bad assets. Because the poor economic performance we’re seeing, the high unemployment, is in part due to the fact that the banks have not restructured, they’ve just muddled along, especially the biggest banks.

There’s also still hundreds of billions in taxpayer money outstanding that hasn’t been paid back yet by the likes of non-banks including AIG, GM, Chrysler, Fannie Mae and Freddie Mac. Some of that may never be recouped.

I’m Mitchell Hartman for Marketplace.

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