Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again, The New York Times’s Zachery Kouwe reported.I guess this latest news shows the understated brilliance and oft-forgotten courage of George W. Bush.
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.
These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies.
The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.
But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business.
“The taxpayers want their money back and they want the government out of our banking system,” Representative Jeb Hensarling, a Texas Republican and a member of the Congressional Oversight Panel examining the relief program, said in an interview.
Profits were hardly high on the list of government priorities last October, when a financial panic was in full swing and the Treasury Department started spending roughly $240 billion to buy preferred shares from hundreds of banks that were facing huge potential losses from troubled mortgages. Bank stocks began teetering after Lehman Brothers collapsed and the government rescued A.I.G., and fear gripped the financial industry around the world.
American taxpayers were told they would eventually make a modest return from these investments, including a 5 percent quarterly dividend on the banks’ preferred shares and warrants to buy stock in the banks at a set price over 10 years.
But critics at the time warned that taxpayers might not see any profits, and that it could take years for the banks to repay the loans.
As Congress debated the bailout bill last September that would authorize the Treasury Department to spend up to $700 billion to stem the financial crisis, Representative Mac Thornberry, Republican of Texas, said: “Seven hundred billion dollars of taxpayer money should not be used as a hopeful experiment.”
So far, that experiment is more than paying off. The government has taken profits of about $1.4 billion on its investment in Goldman Sachs, $1.3 billion on Morgan Stanley and $414 million on American Express. The five other banks that repaid the government — Northern Trust, Bank of New York Mellon, State Street, U.S. Bancorp and BB&T — each brought in $100 million to $334 million in profit.
The figure does not include the roughly $35 million the government has earned from 14 smaller banks that have paid back their loans. The government bought shares in these and many other financial companies last fall, when sinking confidence among investors pushed down many bank stocks to just a few dollars a share. As the banks strengthened and became profitable, the government authorized them to pay back the preferred stock, which had been paying quarterly dividends since October.
But the real profit came as banks were permitted to buy back the so-called warrants, whose low fixed price provided a windfall for the government as the shares of the companies soared.
Despite the early proceeds from the bailout program, a debate remains over whether the government could have done even better with its bank investments.
Bush pushed for this bank bailout amidst a contentious national debate over whether or not government was getting too big. Hundreds of thousands of protesters took to the streets to air their grievances that Bush was turning the United States into The Netherlands. They questioned his patriotism and insisted that a man who would seek to have the gubb'ment overtake banks wads leading us down the slippery slope to Socialism and perhaps even worse, Communism. If Bush was taking over banks today, what would be next? Would Bush soon be telling "real Americans" how many children they could have, and how long their Grandma could live? What sort of an unpatriotic man would go such a heinous thing?
For weeks, Bush was assailed as a secret American hating terrorist, who was hellbent on taking guns, the internet, and Skoal from "real Americans" in the ultimate DC power grab. Soon, millions began writing letters, calling left-wing talk shows, and showing up at townhall meetings in an effort to let their elected officials know that enough was enough. Bush's out of control spending and obliteration of the Constitution that our founding fathers so painstakingly assembled would not be tolerated. These "real Americans" would die in cold blood before they allowed a tyrant like George W. Bush to "take their country away".
Don't tread on me!!! These colors don't run, George W. Hitler! U-S-A! U-S-A! U-S...
But courageous President that he was, Bush endured the weeks of leftwingnuttery and did what his principles told him was right. He endured death threats, gun wielding protesters, calls for his head on a platter, and a rapidly sinking approval rating. And in the end, it turns out he just might have been somewhat right. In the end, this "bailout" would actually prove to make the United States money, while helping stabilize our financial markets and prevent more bank collapses in a time of economic depression. And that's why George W. Bush is a real man of geniuuuusssss.
Uh, sorry. What's that you say?!?
Question: Do you give George W. Bush credit for passing this bailout, despite the millions of "real Americans" who assailed him as Hitler, a Socialist, a Communist, unpatriotic, and a bastardizer of the Constitution in the process? Does it surprise you that despite those millions of protesters, the bailouts actually seem to have worked, and in some ways made us money?
As Big Banks Repay Bailout, U.S. Sees Profit [NYTimes]