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Monday, November 16, 2009

How's Your Bailout? Financial Edition

The Washington Post reports that 46 firms that received money from the Troubles Asset Relief Fund, otherwise known as TARP or the federal bailout, "had missed required dividend payments to the government as of the end of September".
Analysts expect more bailed-out firms to fail in the months ahead. Others may survive but will struggle to repay the government. Steven Rattner, the former head of the government's efforts to bail out the auto industry, said recently that the full public investment in GM is unlikely to be repaid. Meanwhile, AIG is dismantling itself, selling healthy subsidiaries at what critics say are bargain prices in an all-out effort to get cash to repay the government.

About $400 billion of federal investments remain in the corporate sector, much of it channeled through TARP. Critics of the program say losses were inevitable, in many cases.

There was a reason private investors didn't want to give these failing firms their money. It was a bad investment. Congress was more than willing to invest our money, though.

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