Remember the wildly unpopular $700 billion TARP bailout that the government passed back in 2008? Well, turns out it may not have been such a bad investment after all.
The goal of TARP, which stands for Troubled Asset Relief Program, was to use taxpayer money to stabilize hundreds of banks across the country and buoy them against the financial crisis. Now, ABC News reports that two-thirds of the $200 billion that the government loaned to troubled banks in the early days of the program has been paid back. What’s more, a new study from investment bank Keefe, Bruyette and Woods has found that the loans have been returned with an average profit of 10% for the government.
“The KBW study found the U.S. Treasury has received $13 billion in earned income and $2.3 billion in posted losses in the program so far. Six banks produced a return on investment for the government greater than 20 percent,” ABC reports.
Of those who have yet to repay the money, most are smaller community banks like Ameris Bancorp in Georgia and First Community Bank in South Carolina.
Unfortunately, not all of our government’s investments have paid off quite so nicely. The government has spent more than a $100 billion bailing out Fannie Mae (Stock Quote: FNM) and Freddie Mac and may well spend more in the future, with little chance of getting that money back. On top of that, the government expects to lose at least $32 billion of taxpayer money from its $182 billion bailout of AIG (Stock Quote: AIG), which was also taken from the TARP money. At this rate, we’re going to need some serious returns on the rest of the TARP money that we do get back.
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