Tuesday, January 26, 2010
How Uncle Sam Will Profit from TARP
This article discusses how the federal government will make money on bailing out banks through TARP. The Congressional Budget Office projects the government will make a profit of $7 billion from assisting the banks. Banks are on track not only to pay taxpayers back all the bailout funds, but improve our enormous budget deficit. When it comes to the $1.3 trillion federal budget deficit, the bank bailout portion of TARP isn't the problem. It's part of the solution.
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It is good news that the banks are paying back with interest, however, they also caused the government to spend billions more (upwards of $800 billion now) to save the US from spinning into a depression, which adds to our budget deficit and reliance on credit from other countries. This is a far greater concern, for many reasons that boil down to the US defaulting on their borrowed funds-- a far fetched idea, but running a $1.3 trillion deficit and growing brings us closer. From an economic standpoint the banks have caused much more damage than the extra $7 billion they paid to the government.
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