Question: How much is the tab for the bailouts, guarantees and tax cuts (so far)?
Answer: Over $5.5 trillion:
1. JPM / Bear Sterns backstop: $29 billion (03/16/08)
2. Housing bill that insures mortgages: $300 billion (07/30/08)
The bill allowed up to 400,000 homeowners to refi into a new 30-yr fixed rate backed by U.S. govt.
3. Housing bill tax cuts and first time home buyer tax credits: $15 billion (07/30/08)
Bill includes a $7,500 tax credit for first-time homebuyers who purchase homes between 04/09/08 and 07/01/09. It also sets aside up to $ billion for cities to buy and renovate foreclosed properties.
4. Purchase of Fannie and Freddie preferred stock: $2 billion (09/07/08)
Also includes warrants for up to 80% of the common stock of each company.
5. Financial support for Fannie and Freddie, mortgage defaults: $200 billion (09/07/09)
6. Troubled Asset Recovery Program (TARP): $700 billion (10/03/08)
$250 billion under Hank Paulson’s direction; $100 billion for Bush and $350 billion for Obama. Paulson gave half of his loot to 9 banks. In exchange, he got non-voting preferred stock, paying a 5% divi from each bank, and $18.75 billion in warrants for common stock.
7. Tax incentives (to sweeten up TARP bill): $150 billion
8. Commerical paper funding facility: $1.3 tillion backstop (10/07/08)
The Fed to buy short term commercial paper through 04/30/09.
9. Temporary Guarantee Liquidity Program (TGLP), 10/14/08: $1.4 trillion
FDIC backed plan that allows banks and “other financial firms” that have been approved to participate and issue up to $1.4 trillion in government guaranteed bond with maturities of more than 30 days. Bonds must be issued by 06/30/09. The guarantee lasts through 06/30/12.
10. Money Market Investor Funding Facility (10/21/08): $540 billion
The Fed announced that they will lend $540 billion to corporations (designed to unclog commercial paper market)
11. AIG / Insurer bailout: $152.5 billion
The deal was originally $85 billion (09/16/08), with an additional $38 billion loan added 10/08/08. The deal was then reworked on 11/10/08 to a $60 billion loan, a $40 billion purchase of preferred stock, and $52.5 billion to buy other mortgage-backed assets of other insurers.
12. GSE Purchases Program (11/25/08): $600 billion
This program will buy up to $600 billion of mortgage-backed securities and debt from Fannie, Freddie, Ginnie Mae and the Federal Home Loan Bank.
13. Term Asset-Backed Securities Loan Facility (11/25/08): $200 billion
Fed will loan up to $200 billion to private investors who would in turn buy securitized assets, backed by auto, credit card, student and small business loans.
14. Automakers……$15 billion ???
15. Runaway inflation: Priceless
If Milton Friedman is right, when all this money finally gains maximum velocity, it will probably jumpstart this economy like we haven’t ever seen before.
Just saying….
But, let’s not forget about the inflation price tag.
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