Wednesday, October 20, 2010

MMF, Making Money Fast

The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than they could have made buying 30-year Treasury bonds -- enough money to fund the Securities and Exchange Commission for the next two decades.

The government has earned $25.2 billion on its investment of $309 billion in banks and insurance companies, an 8.2 percent return over two years, according to data compiled by Bloomberg. That beat U.S. Treasuries, high-yield savings accounts, money- market funds and certificates of deposit. Investing in the stock market or gold would have paid off better.

When the government first announced its intention to plow funds into the nation’s banks in October 2008 to resuscitate the financial system, many expected it to lose hundreds of billions of dollars. Two years later TARP’s bank and insurance investments have made money, and about two-thirds of the funds have been paid back. Yet Democrats are struggling to turn those gains into political capital, and the indirect costs of propping up banks could have longer-term consequences for the economy.

“From the perspective of the taxpayers getting their money back, TARP has been a great success,” said Todd Petzel, chief investment officer at New York-based Offit Capital Advisors LLC, which has more than $5 billion of assets under management. “But there are other costs as the government made it possible for the banks to pay back TARP. Those costs can turn out to be larger, and their legacy could last longer.”


I know its late in the game but this pretty much proves my point about why Democrats should have been running away from TARP (as well as other accomplishments) instead of away from it. Most people don't even know that TARP didn't cost a gazillion dollars but instead came in at $309 billion. And it WORKED! We still have a viable banking system, the stock market didn't implode, and now to top it off the government is pulling in 8.2% in profit.

Unfortunately most Democrats bought into the media narrative and some polling and instead of explaining to voters what actually happened just tried to avoid the topic all together. Now with two weeks out its hard to say this is a game changer but there IS still a chance to get out there and beat the drum that TARP worked, their vote or their support for it was warrated, and Republicans had and have NO alternative that would have saved our banking system.

It will be interesting to see if any Democrat has the ball to point this out in the next two weeks. One thing is for sure in my mind, they all SHOULD!

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