Bailout Watch
A regular update on all the ways the government is meddling in the market.
Zoop! A second bailout to Citi Group! Paaf! “Supplicating automakers, come back with a better plan to spend our billions!”
Finding it difficult to figure out where all your tax dollars (and new government debt) are being shoveled? The Big Money presents Bailout Watch, a handy updated scorecard to help you track the bailout, in all its manifestations, in one place: What’s up, what’s ongoing, what’s delayed, and what’s out.
| Program | What is it? | Cost | Progress | Today's Update |
| Bank equity injections | Treasury plan to buy equity in U.S. banks | Approved or pending equity injections now total $250 billion. | In addition to backstopping troubled assets and giving it $25 billion worth of TARP aid, the government is spending another $20 billion to get more Citigroup preferred stock. | |
| Auto industry bailout | Struggling automakers are looking for support as they run out of cash. | $25 billion already allocated for more-efficient vehicles. The industry wants another $50 billion. | Humbled! The industry was sent packing by supportive senators last week and told to come up with a better plan. Obama echoed Pelosi and Reid yesterday. | |
| Other TARP funds | Congress only authorized $350 billion in TARP funds. | Another $350 billion is available to be released by Congress. | With today’s $20 billion for the new credit facility, we estimate there’s only $20 billion left in the kitty. So, after hesitating, Paulson is now indicating he might be back for the rest, after all. | |
| Taking over bad assets | Treasury purchase of "troubled assets ... residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans" | This was going to cost as much as $700 billion. | Citigroup hits the jackpot! The government stepped in on Sunday to guarantee up to $306 billion in sketchy loans. It’s a multiplayer deal—see here for the potential costs. | |
| Supporting mortgages and direct housing assistance | With all the Wall Street support, Main Street is crying out for relief. | Estimates range widely. | Hard to say what’s happening here. Paulson, who’s the ultimate decider on using the TARP money that would be needed for this to go ahead, was positively Greenspan-ian today: “We’re continuing to work every day on coming up with a program, a TARP program, to mitigate foreclosures. … I am going to run right to the end, and if you’ve got any doubt about that, I tell you, you’re missing the point.” | |
| Company takeovers | Government taking majority stakes in Fannie Mae, Freddie Mac, and AIG | AIG has now received $150 billion. | Fannie and Freddie are getting a lot of support! The government’s buying $100 billion worth of their debt and another $500 billion worth of their mortgage-backed securities. | |
| Helping other lending | Fed program to help issuers of credit-card, auto, student, and Small Business Administration loans | Up to $200 billion will be lent until the end of 2009 . Twenty billion dollars in TARP money will seed the program. | Finally, a Main Street fix? This program was announced this morning, but it may start only in February . | |
| Stimulus package | Checks, infrastructure spending, and other funds to spur the economy. | First one passed in February: around $168 billion. Pre-election, Obama was talking about $175 billion more. | Probably not coming till after inauguration, but it’s going to be big enough to “jolt the economy,” Obama said today. Outside adviser Laura Tyson said $600 billion might be needed. | |
| Support for money market mutual funds | A New York Fed plan to buy up short-term commercial paper from money market mutual funds | Up to $540 billion in Fed financing is available. | This was supposed to begin this week, but the New York Fed wouldn't confirm after a request from The Big Money. | |
| Deposit-insurance increase | Until Dec. 31, 2009, the FDIC guarantees the first $250,000 per bank account, up from $100,000. | None expected, although banks will have to pay 7 cents more for every $100 insured beginning in 2009. | Six banks have gone under since the increase, but they've been taken over by other banks; no need to call on this insurance yet. | |
| Money market mutual fund guarantee | Treasury guarantees investors will get at least $1 for every dollar they invest. | Up to $50 billion is available. | Extended! This program, due to expire at the end of the year, will now run till April 30, 2009. | |
| Interbank lending guarantee | The FDIC is guaranteeing bank debt and deposits in banks' own accounts. | The FDIC says there'll be no cost to the taxpayer because bank fees will pay for it. | Rules have been established and it’s under way, with Goldman Sachs selling $5 billion worth of FDIC-backed notes today. Three other big banks are preparing to enter the market. | |
| Buying commercial paper | Fed program to buy up short-term debt to give companies access to cash | The Fed has now bought up $271 billion in commercial paper (minimal anticipated cost as issuers have to pay back the money). | Look for another weekly update from the Fed after Thanksgiving. |
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