“We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic. It’s almost certainly going to be a loss.”

-Neil Barofsky, TARP Watchdog

Anyone surprised at all about this?

“Neil Barofsky, the federal watchdog for the $700 billion financial industry bailout, said the program will “almost certainly” result in a loss to U.S. taxpayers.

Barofsky, the special inspector general charged by Congress with policing the Troubled Asset Relief Program, also said he’s conducting 65 investigations of possible fraud. The former federal prosecutor has pressed the Treasury Department to be more open about the rescue of companies including insurer American International Group Inc. and automakers General Motors Co. and Chrysler LLC.

“Tens of billions of dollars are likely to be lost on the automotive bailout,” Barofsky said. In addition, some banks that received TARP money are failing, so the aid they received will be wiped out.

Barofsky also said he is working on a review of how the government exercises its rights as a shareholder in the auto companies, Citigroup Inc. and other firms in which it holds large stakes.

Your mileage losses may vary . . .


Barofsky Says TARP ‘Almost Certainly’ Will Bring Loss
Robert Schmidt
Bloomberg, Nov. 12 2009


Category: Bailouts, Investing, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “TARP: ‘Almost Certainly’ A Money Loser”

  1. bsneath says:

    Have to give the Obama Administration credit for one thing. They required the auto unions to accept competitive pay packages. Now lets hope that Gov’t Motors and Fiat, err I mean Chrysler can make cars that people want to buy.

  2. RW says:

    No surprises here and only unexpected by those who specialize in being astonished, but the meme that government will need to ‘exercise some rights’ seems to be gathering some strength these days so that should make things more interesting.

  3. alfred e says:

    Seems somebody really screwed up by appointing Barofsky to his job.

    He seems to be taking it entirely too seriously to please his bosses. But he’s in the driver’s seat. What are they gonna do? Fire him? Ask Sen Dodd and Barney Frank.

  4. bsneath says:

    Understatement of the Day (from CR)

    “When I first took office, I can’t tell you how many times I’d be having a sit-down and warning about potential fraud in the program and I would hear a response basically saying, ‘Oh, they’re bankers, and they wouldn’t put their reputations at risk by committing fraud.’ I think we’ve done a good job of instilling a greater degree of skepticism that what comes from Wall Street isn’t necessarily the Holy Grail,” – Neil Barofsky

  5. VennData says:


    Why should the Bush-era TARP be a money maker? It was designed to save the US financial system. Without adding in the value of the tax receipts etc of the saved American economy, you’re missing the secondary effects.

  6. jnutley says:

    Inflationary or Deflationary?

    I can accept that the money is “lost” in that it will not show a return and the business that received it will go under, unable to ever pay it back. But is the money “Gone” or is it residing now in the T-Bills that someone bought that ended up funding the TARP program? Or did the Treasury Dept create funny money that passed from their hands to these dying businesses but was never placed in any other column and now evaporates like morning dew?

    Inflationary or Deflationary?

  7. Mannwich says:

    @VD: B, bu, but we were told by our trusted servants in the MSM (ahem, CNBC, Bloomberg) and others in the establishment that this was “already making money” for the taxpayer and would likely make money in the end. That’s why it matters.

  8. What Is Seen and What Is Not Seen
    1.1In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

    1.2There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

    1.3Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil…
    –Bastiat, if you had to pick one Name, of an Author, with which to convey the Field of Economics…

  9. ZedLoch says:

    In the public psyche, TARP was ~1 trillion dollars flushed down the toilet (just ask the tea baggers). So if the treasury can get *any* of it back, in a way its all bonus…at least that’s how its being spun.

  10. Jeff,

    good point, though, don’t forget Rags like http://business.theatlantic.com/2009/08/are_we_turning_a_profit_on_tarp.php that cater to the psuedo-Intelligencia among us..
    no more important constituency that those who /think/ they think for themselves..

    Unfortunately, for the MSM y TPTB, there are webloggers, like BR and this cat http://www.allamericanblogger.com/8522/tarp-makes-americans-a-profit-not-so-much/
    willing to spill pixels on the Ball, as opposed to its Spin..

  11. Mannwich says:

    Agreed Hoffer, but it wasn’t/isn’t just the MSM. Guys like Gates and Buffet (and others of their ilk) were/are out there cheerleading and asserting that we’ll make money on these bailouts.

  12. wunsacon says:

    I’ve been Madoff’d!! I was planning to retire on the dividends TARP was going to pay us taxpayers.

    What should I do now? Should I consult an attorney?

  13. Jeff,

    right you are to note that Gates y Buffett are keynoters on the StatusQuo Roadshow..

    you’d think their ‘green’-cred would take a hit after seeing all the Ink spilled in coverage of their recent utterings..

  14. VennData says:

    “They” were scoring points to maintain sources should have warned you right from the start. “They” left out AIG, Fannie, etc… etc…

    It only matters what “They” say if you believe the media sources without doing a bit of due diligience. Who cares what some newspaper columnist says?

    Whether it all vanishes or not isn’t important as the money was used to save the American financial system getting any back is a bonus. That is what matters.

  15. Pat G. says:

    “You cannot escape the responsibility of tomorrow by evading it today.” – Abraham Lincoln

  16. call me ahab says:


    you are such a Kool-Aid drinker-

    BR- re TARP- i just don’t give a shit anymore- who cares- the banks will ultimately fail- it’s a sunk cost-

    thanks to VD and his ilk- we can count on a country that turns into a shabby shuffling shadow of its former self-

    no hard decisions made until it’s too late-

    but who cares- at least VD’s preference for Commander in Chief is in power-

    and of course that the TBTF banks were saved-

    VD’s got all figured out- we should all just step aside

  17. easystreet says:

    Mr. Buffett exhorted students to “marry the right person” and said, “The worst investment you can have is cash.”

    getting really tired of this guy and jealous

  18. you’d think their ‘green’-cred would take a hit after seeing all the Ink spilled in coverage of their recent utterings..

    I think it has. It’s just that no one has told them yet.

  19. Where is Frankie to explain this to us. Didn’t he say we were going to make a profit on this?

  20. VennData says:

    Mr. Ahab,

    To be taken seriously, you need to support your statements with data of some sort or another.

  21. danm says:

    Everytime I look at the Fed’s balance sheet, I keep on wondering what they’d do on the liability side if they suddenly had to mark-to-market those securities and take a 50% haircut on those securities.

    Would they write off the paper currency? All the money in mattresses would be worth nada and that would punish those not playing according to the Fed’s rules.

  22. danm says:

    To be taken seriously, you need to support your statements with data of some sort or another.
    To win an argument today, I’ve noticed a couple of techniques:

    1. You tell them they need a little more lovin’
    2. You tell them they are just jealous
    2. You tell them to provide mathematical proof… and then they tell you they don’t believe in science.

    Any others?

  23. danm says:

    and then you tell them you don’t believe in science

  24. call me ahab says:

    mr data- AKA VD-

    so . . .what data am i debunking- this?

    “Whether it all vanishes or not isn’t important as the money was used to save the American financial system”

    so analyzing just this-

    ‘was used to save the American financial system”

    the question that remains- for how long and at what cost?

    and i say the cost is- the long term health of this country and its economy-

    keep sucking on the Kool-Aid VD

  25. number2son says:

    What! Are we this far along in the comments without the obligatory Louis Renault wise crack?

    Okay, it’s up to me, then ….

    “I’m shocked, shocked to find the TARP will result in losses to the taxpayer!”

  26. [...] seems to be one of the few officials that has to tell us what we already know: TARP is “almost certainly going to be a loss”for taxpayers and Geithner rolled over for Wall Street in the AIG [...]