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US Reaps Profit as Banks Pay Back TARP Funds
Fed pulls in $14B from loan programs
By Jason Farago
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Posted Aug 31, 09 7:38 AM CDT
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(Newser)
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When the government spent some $240 billion last year to help avert financial disaster, the idea of making a profit from the TARP funds invested in teetering banks looked like a long shot. Now, however, profits from eight banks who’ve paid back the cash have totaled some $4 billion, or 15% annualized. Bailouts like those of AIG, Detroit, Fannie Mae and Freddie Mac could still hit coffers hard—but the profits are a “welcome surprise,” the New York Times notes.
“Taxpayers should heave a sigh of relief that the investment in the banks protected them from even more catastrophic losses from more bank failures,” says an expert. Profits in the billions have stemmed from investments in Goldman Sachs and Morgan Stanley, while American Express, Northern Trust, and others have paid taxpayers hundreds of millions. Meanwhile, the Federal Reserve’s loan programs have brought it profits of some $14 billion, the Financial Times reports.