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We'll there is a deeper part to this answer. In short. I think the gov will make money on the TARP from the major banks that do not fail and who fully recover. Here is the problem: 1. The US Gov (treasury) did not have $700 Billion to lend out in the first place. This was 100% borrowed money. So the US gov is really paying back China, Saudi, Japan, etc for the debt we incurred to loan this money out to banks. “MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES” www ... 2. The US Gov (including FED, Treasury, FDIC) actually has lent, guaranteed, backstopped, etc, about $15+ TRILLION (I’ve added this all up and cited sources in my post history). This money is not being paid back right now and the major media and Obama Admin is not counting this loan risk. Just a few examples: 03-17-2008 “The Fed has agreed to provide financing of up to $30 billion of less-liquid assets held by Bear Stearns” www ... 09-06-2008 “Fannie and Freddie hold roughly $1.5 trillion in direct debt, guarantees on what could be as large as $5 trillion and possibly off-balance sheet obligations that could reach $3 trillion, according to recent estimates from Ladenburg Thalmann & Co.” www ... 01-16-2009 “The government said earlier today it will invest $20 billion in Bank of America and guarantee $118 billion of assets to help the company absorb Merrill and prevent the financial crisis from deepening.” www ... 01-31-2009 “In late November (2008), the government agreed in a deal struck over a weekend, to guarantee 90% of the losses on a pool of $300 billion in loans held by Citigroup.” www ... 03-17-2009 “…$170 billion in taxpayer commitments provided to A.I.G. since its near collapse last September…” www ... 06-11-2009 “A total of 378 banks, the Fed reported, had pledged $965 billion in collateral to the emergency lending program known as the discount window, in exchange for $448 billion in loans.” www ... There is a ton of more money loaned and or backed by the USG, et al, which is not TARP money and makes TARP look like loose change in your pocket in comparison. Keep in mind that this does not include the what - $780 Billion:"Obama stimulus package." This does not include the $400+ Billion budget deficit for 2009. This does not include the approx $1.4 Trillion budget deficit next year, or thereafter. This does not include any losses from the above. Get the idea? So TARP is just a small part of the overall picture. It is the only one that has a familiar name, so that is the one that is talked about. 4 weeks ago: "Why do big banks want to pay back the bail out money early?" (See my answer - best answer is incorrect and politically motivated) answers ... 3 months ago: "Will banks Q1 results be positive or negative?" answers ... 6 months ago "Interest dropping to .5% ?" answers ... 9 months ago "US Gov bail out of fannie mae.?" "I still think WMU, LEH, MER, among others still have big problems that they are not or cannot deal with." answers ... 9 months ago: "Why the gov't does not invest 700B$ in education, health care, alternate energy but bailout the banks instead?" answers ... One needs to know that TARP is not the central problem. The big banks and brokers want to get out of TARP because they don't want continued gov control over their business. 06-16-2009 Watch PBS Frontline: “Breaking the Bank” to understand more about government control over the banks and TARP. www ... Also keep in mind that GM, Chrysler, and GMAC who are not banks also got TARP money. GMAC later was allowed to convert into a bank to qualify for TARP loans which good luck if we ever see that money again. How did an auto company get TARP money is beyond me? I guess because the gov can change the rules whenever it wants. 12-14-2008 “The Troubled Asset Relief Program (TARP) will not be used to purchase troubled assets. Treasury Secretary Henry Paulson announced on Nov. 12 that remaining TARP funds may be used to spur activity in the asset-backed securitization market. "Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards.” findarticles ... or could it be because GM fronted $2.8 million to certain members of Congress in the 1st Q 2009? “GM Spent $2.8M Lobbying Government” wjz ... Chrysler says they will not be paying back the US Gov a dime since they are legally bankrupt. And out brilliant government gives Chrysler billions more. 05-06-2009 "Chrysler won't repay bailout money" money ... GM is getting upwards and total of $30-50 Billion and good luck if we ever see a return on that money. “U.S. providing GM $30 billion in bankruptcy deal” www ... Keep in mind that we already loaned about $25 Billion to GM, GMAC and Chrysler. www ... The rules of TARP continue to keep changing to however the gov see fit. IT doesn’t matter that the purpose of the TARP was to buy “toxic bank assets” aka “bad bank loans.” That never happened. “The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase assets and equity from financial institutions in order to strengthen its financial sector.” en ... “The troubled assets relief program was designed to take bad mortgages off the books of financial institutions in America, and onto the books of the federal government.” troubled-asset-relief-program ... Further answers covers GM related, TARP issues, and gov bailout debt: See "ABOUT THE GM BAILOUT: (supplement)" answers ... I think TARP should have been named "TRAP." See my post history for more related articles. Add me to view them. <06-17-2009>

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--- Finance & Risk Management Consultant --- 20 years in the markets (see bio for more. add me to view post history)

by Net Advisor

6 months ago

Asker's Rating: 

the money being paid back to the treasury probably was spent today by congress

by g man w- 6 months ago

Net Adviser makes a good point in that while some of the TARP money is well placed and paying dividends, much of it has gone down a rat hole. And I still don't see in the Constitution any authority to do what they have done. And while I am wearing my Obama-bashing hat right now, let's not forget that under Bush the American People and Congress said NO to all this bailout stuff, and both administrations have done it anyway. In a free market economic system based on inalienable rights, when the government picks winners and losers, Freedom loses.

by who is #1?- 6 months ago

No, and to me it seems like a rip off.If we were to make money, the companies would have to make profits and then share them with the government. But the government would only collect on the basis of the stocks that they bough. So it's a very iffy proposition.The government only gave money to the weak companies because the strong ones refused. So it's a double risk. A real dumb idea.

by Dr.John L- 6 months ago