TARP Has Lost 40% Since Inception

Or Zombie Banks 1, Taxpayers 0.

In reality was looking for a minus infinity symbol but blogspot is woefully inadequate when expressing involuntary taxpayer performance. The latest shock to the U.S. taxpayer came last Friday when the Ethisphere TARP index recorded a $21 billion drop in value. The TARP Index, created by the Ethisphere Institute, tracks the U.S. Federal Government's return under its TARP investments. Out of the $306.1 billion so far handed out under TARP since its inception, there has been an unrealized loss of $123 billion, compliments mostly of the big 4: C, BAC, WFC and JPM. In other words, the U.S. Government (and its taxpaying funders) has lost over 40% of their investment. This translates into a loss of $1,082 per every US household, roughly double the proposed stimulus tax credit.

Hank Paulson and Bush's administration have already received earfuls for failing to ensure the initial $350 billion of funds was spent properly, as critics point out such wasteful transgressions as Citi's $8 billion loan to Duai's government, JPM's $1 billion investment in India, and Bank of America's $7 billion investment in China Construction Bank Corp.

This past week marked the largest downward slide of the Ethisphere TARP Index since its creation, losing just under $21 billion in value. Ethisphere estimates that more than a third of the TARP companies have lost at least 25 percent of their value to date," said Stefan Linssen, Managing Editor of Ethisphere Magazine and one of the lead research analysts behind the Ethisphere TARP Index. “More rumors surfaced that Bank of America would take the path of Citigroup and have the Treasury convert a substantial amount of its preferred shares to common stock, though CEO Ken Lewis continues to adamantly deny that the bank will need any more infusion of capital of any kind. Aside from Citigroup, Ethisphere estimates that the rest of the calamity investments were relatively stable this past week.

And just so taxpayers know who to direct their righteous indignation at, here are the winners and losers, or zombie banks as the latter are better known.

The largest estimated losses to date under TARP are:

1. Citigroup (C) – with an estimated loss of $35.9 billion

2. Wells Fargo (WFC) – with an estimated loss of $12.5 billion

3. Bank of America (BAC) – with an estimated loss of $11.3 billion

4. JP Morgan (JPM) – with an estimated loss of $6.3 billion

The largest estimated gains to date under TARP are:

1. Great Southern Bancorp (GSBC) – with an estimated gain of $11.1 million

2. Community Bankers Trust Corp (BTC) – with an estimated gain of $2.0 million

3. First Citizens Banc Corp (FCZA) – with an estimated gain of $1.5 million

Comments

[z28rgr8:]

These losses were expected and are the reason for the TARP program. The banks were expected to write off assets. The stocks were expected to fall. TARP was meant to keep them SOLVENT - not profitable. Accurate info, but not relevant.

Mar 10 08:26 AM

[MichaelJ007:]

AIG received most of its GOV cheese outside of TARP- $40B from TARP, I believe. Yeah losses were expected, but so was solvency, sound balance sheets and revived credit/lending. So far we've only realized the losses.

Mar 10 10:02 AM

[samwise:]

Exactly, MikeJ. The government is investing in common--that's stating where the rubber hits the road that the government says these are good investments AND THEY EXPECT A RETURN. THEY STILL HAVEN'T DEALT WITH THE TOXIC ASSETS EITHER Z28, so AT BEST you're a moron. We're not trying to launch the space shutttle here--WE WERE SUPPOSE TO GET OUR MONEY BACK.

Mar 10 11:32 AM

[Gedankonomist:]

Better the Federal government throw your tax money into a hole than finance things that are destructive to this country.

For example remember all the race riots back in the 1960's? Funny how they all got started shortly after Lyndon Johnson's so-called "Great Society" program. That "program" was financed with your tax money. Much of that money went to organized groups who ignited those fires.

Mar 10 04:07 PM

[PainfullyAware:]

TARP - The American Ripoff Program.

This Legislation was written so poorly that it would be a miracle if its outcome did not follow suit.

To those of you who think the tarp was "Necessary"; Please read how the oversight was structured, as passed.

Congress has no recourse. The only thing they can do is to "Agree - Not To Give The Program More Money". This vote is structured the same way as they receive their pay raises. Congress must pass by vote - NOT TO GET A PAY RAISE. They are currently bringing in above $160,000 in salary a year. Do you actually think they will vote to stop the next pay raise?

The Lunacy Continues.

Mar 10 05:03 PM

[terryg8:]

So, I can expect to see Lewis and Rubin come to my house with a torch? Is that what you are saying?


On Mar 10 04:07 PM R Jensen wrote:

> Better the Federal government throw your tax money into a hole than
> finance things that are destructive to this country.
>
> For example remember all the race riots back in the 1960's? Funny
> how they all got started shortly after Lyndon Johnson's so-called
> "Great Society" program. That "program" was financed with your tax
> money. Much of that money went to organized groups who ignited those
> fires.

Mar 10 11:02 PM

[milkchaser:]

The key here is that the loss is unrealized and may, in fact, turn around. Were taxpayers forced to pay their share as computed above, yes this would counteract the stimulus "tax cut".

But if the Obama "tax cut" tells us anything it is that the average taxpayer is not going to be asked to pay his/her fair share. They have not for a long time. Bush's tax rate cuts shifted more of the Federal tax burden to high earners. Obama promises more of the same (with the exception of his carbon cap/tax which is a "fair", across-the-board tax on all).

As for alleged misspending of TARP, the three examples shown are loans to foreign entities. Is this wrong? Should these banks stop lending to foreigners? I say let them lend where the prospect of profit is highest, which may very well be overseas.

Mar 11 09:09 AM

[paxguy:]

Sorry Tyler, your analysis is wrong, especially for WFC. They will pay back the 25 Billion of TARP money, with interest. They already made their first dividend payment. The Government borrowed money (by the sale of T-Bills) at 0.5% and lent it to Wells at 5.0%. Not really a bad deal for the taxpayer. Even for troubled banks, like Citi, the Gov't is on the hook anyway, through the FDIC. So, if you lose money through the TARP or through the FDIC, what is the difference? The RTC, (the '80s version of TARP) ended up making money.

Mar 11 12:36 PM