New Cost Estimate for Bank Bailouts: $87 Billion
Treasury Secretary Timothy Geithner is telling Congress that the administration believes the final cost of the government's heavily criticized financial bailout effort could be as low as $87 billion.
Geithner made the new estimate in a letter Friday to congressional leaders that was obtained by The Associated Press.
A year ago, officials were estimating the bailout could cost as much as $500 billion.
The new estimate said the biggest losses will occur from the government's support of mortgage companies Fannie Mae and Freddie Mac. That loss was put at $85 billion followed by a loss of $49 billion from providing help to homeowners facing the threat of losing their homes through foreclosures.
Geithner's letter estimated that the government would lose $48 billion through the support provided to insurance giant American International Group and another $28 billion would be lost through the billions of dollars in assistance provided to General Motors, Chrysler and their auto financing arms.
The biggest offset to those losses will be earnings of $115 billion that the administration expects the Federal Reserve to realize from the extraordinary assistance it has given to provide liquidity to the financial system.
The new estimates, which President Barack Obama is expected to cite in his weekly radio address on Saturday, are part of the administration's intensified lobbying campaign to get Congress to pass sweeping financial overhaul legislation.
Democrats have set an initial showdown vote for next Monday on legislation pending in the Senate. The House has already passed its version of what would be the most sweeping overhaul of the financial system since the 1930s.
"The cost of stabilizing the financial system is likely to be significantly lower than previously expected," Geithner wrote in the letter to Democratic and Republican leaders in the House and Senate.
He said that the administration was estimating a year ago that the effort to support the financial system would cost more than $500 billion, or 3.5 percent of the total economy, as measured by the gross domestic product. He said the new lower estimate would be the equivalent of less than 1 percent of GDP.
He said because of the lower costs, the federal deficit and the total national debt will be lower than earlier projections. Administration officials said the costs could fall even further as it prepares updates to the bailout costs included in the budget Obama sent to Congress in early February.
In his letter, Geithner included some revised estimates that the administration had already released along with new projections in some areas.
The administration had already lowered the cost of the $700 billion bailout program, known as the Troubled Asset Relief Program, to $117 billion. That covers the losses from the auto, AIG and the mortgage foreclosure programs and earnings of up to $11 billion from several other programs under TARP.
In addition to the $117 billion in TARP losses, the administration is estimating losses of $85 billion from the support to Fannie Mae and Freddie Mac. Those two categories of losses would be offset by the $115 billion in earnings the administration expects will be realized from the Fed's support programs.
AP Geithner made the new estimate in a letter Friday to congressional leaders that was obtained by The Associated Press.
A year ago, officials were estimating the bailout could cost as much as $500 billion.
The new estimate said the biggest losses will occur from the government's support of mortgage companies Fannie Mae and Freddie Mac. That loss was put at $85 billion followed by a loss of $49 billion from providing help to homeowners facing the threat of losing their homes through foreclosures.
Geithner's letter estimated that the government would lose $48 billion through the support provided to insurance giant American International Group and another $28 billion would be lost through the billions of dollars in assistance provided to General Motors, Chrysler and their auto financing arms.
The biggest offset to those losses will be earnings of $115 billion that the administration expects the Federal Reserve to realize from the extraordinary assistance it has given to provide liquidity to the financial system.
The new estimates, which President Barack Obama is expected to cite in his weekly radio address on Saturday, are part of the administration's intensified lobbying campaign to get Congress to pass sweeping financial overhaul legislation.
Democrats have set an initial showdown vote for next Monday on legislation pending in the Senate. The House has already passed its version of what would be the most sweeping overhaul of the financial system since the 1930s.
"The cost of stabilizing the financial system is likely to be significantly lower than previously expected," Geithner wrote in the letter to Democratic and Republican leaders in the House and Senate.
He said that the administration was estimating a year ago that the effort to support the financial system would cost more than $500 billion, or 3.5 percent of the total economy, as measured by the gross domestic product. He said the new lower estimate would be the equivalent of less than 1 percent of GDP.
He said because of the lower costs, the federal deficit and the total national debt will be lower than earlier projections. Administration officials said the costs could fall even further as it prepares updates to the bailout costs included in the budget Obama sent to Congress in early February.
In his letter, Geithner included some revised estimates that the administration had already released along with new projections in some areas.
The administration had already lowered the cost of the $700 billion bailout program, known as the Troubled Asset Relief Program, to $117 billion. That covers the losses from the auto, AIG and the mortgage foreclosure programs and earnings of up to $11 billion from several other programs under TARP.
In addition to the $117 billion in TARP losses, the administration is estimating losses of $85 billion from the support to Fannie Mae and Freddie Mac. Those two categories of losses would be offset by the $115 billion in earnings the administration expects will be realized from the Fed's support programs.
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Me...I think that it was a little of both.
FOR MAJOR PRINCIPALS, DEALERS, TRADERS IN BOTH COMMODITY AND STOCK MARKETS
In the name of providing more liquidity, increased efficiency of our markets, and other logically and beneficially-sounding reasons for justification of such U.S. FEDERAL GOVT LICENSED practices, our financial exchanges have been granted such licenses for MANY DECADES - perhaps for one hundred years or more.
Prices of the underlying security or commodity are regularly and frequently manipulated, specifically for 'accommodation' of the specie - either to increase or to reduce its price - which is held by the dealers, traders and/or principals, according to their positions (long or short, or both).
The following has been copied from an item written against 'short selling' and against selling what is not owned, or what does not even exist:
[ The CFTC is the Commodity Futures Trading Commission, and their job is to regulate futures contracts, to prevent fraud. But they protect and encourage fraud! How? They place position limits on the longs (and there should never be limits on what you can buy in a free market), but they refuse to place and enforce position limits on the shorts (who fraudulently sell what they do not have). If anything, to prevent fraud, they should limit the shorts, and not limit the longs.
Also, it is well known that JP Morgan is a major precious metals short, but the CFTC does nothing.
http://www.caseyresearch.com/displayGsd.php?id=106 ] END
FINAL, BOTTOM LINE QUESTION:
What happens when the holders/owners of the contracts, options, derivatives, and/or other complex paper 'representational certificates', demand delivery of what they purportedly own?
They will find out that only perhaps one percent of the underlying specie or commodity actually exists, and that the vast majority have been sold fraudulent pieces of paper!
If you want to simplify, then as an example, many customers or buyers of the Brooklyn Bridge don't know that when it comes time to deliver, only one buyer can actually take possession of it. The others can take their paper contracts and use them to wipe their ...
...or paste them on their walls to remind them not to trust in paper.
It has been reported that such is common practice, as way of DBAU.
It has also been reported that only ONE dollar is backing ONE HUNDRED OR MORE DOLLARS in the banking system.
Fractal banking is having many additional units or dollars lent out than are covered or backed by reserves.
As it relates to commodities like Ag and Au, similar or worse ratios based on many paper contracts per one ounce or one unit of the underlying commodity are common.
Picture an inverted pyramid with -------------
-----------
---------
-------
-----
---
v
each layer of contract on contract on derivative, or share, or option, being farther away from the ONE real unit.
Until now, only a few percent of the purchasers actually insisted on delivery and possession of the underlying commodity, but the time is approaching that more will want delivery of the REAL THING instead of holding paper. If more than the amount is available or than exists is demanded, we'll likely witness skyrocketing prices for the non-existent specie or unit.
Will they thank President Obama and Democrats for bold and decisive action? Of course not. They are not that concerned about playing fair.
Will they continue to exagerate and accuse President Obama and Democrats of a trillion dollar bailout? You can count on it.
No different than GM announcing they "paid back thier loan".
AND OTHER FINANCIAL PARASITES EXPECTED - BOTH 'ON AND OFF' OF WALL ST
We must relentlessly pursue these greedy, corrupt, selfish, financial sociopaths who unconscionably take, and contribute very little or nothing, back to society, to their community or to their country, with the exception of sapping our financial security and ruining hundreds of millions of others' lives.
It will not be enough to watch our so-called justice system simply mete out symbolic or even suspended prison terms for these economy-and-nation wreckers. We must demand that these criminal parasites be made to serve lengthy prison terms with hard labor, pay heavy fines to government, and compensation to their victims, as well as their money, assets, etc, confiscated.
We have permitted such past behavior to corrupt our young people 'by example'. It will take a hell of a lot to reverse the same.