By Mary Bottari on April 01, 2010

Today, the Real Economy Project of the Center for Media and Democracy (CMD) released an assessment of the total cost to taxpayers of the Wall Street bailout. CMD concludes that multiple federal agencies have disbursed $4.6 trillion dollars in supporting the financial sector since the meltdown in 2007-2008. Of that, $2 trillion is still outstanding. Our tally shows that the Federal Reserve is the real source of the bailout funds.

CMD’s assessment demonstrates that while the press has focused its attention on the $700 billion TARP bill passed by Congress, the Federal Reserve has provided by far the bulk of the funding for the bailout in the form of loans amounting to $3.8 trillion. Little information has been disclosed about what collateral taxpayers have received in return for these loans, sparking the Bloomberg News lawsuit covered earlier. CMD also concludes that the bailout is far from over, as the government has active programs authorized to cost up to $2.9 trillion and still has $2 trillion in outstanding investments and loans.

Learn more about the 35 programs included in the CMD tally by visiting our Total Wall Street Bailout Cost Table, which contains links to pages on each bailout program with details including the current balance sheet for each program.

Treasury Department Self-Congratulations Premature

While the Treasury Department has been patting itself on the back for recouping some of the Troubled Asset Relief Program (TARP) funds and allegedly making money off of its aid to Citigroup, the CMD accounting shows that TARP is only a small fraction of the federal funds that have gone out the door in support of the financial sector. Far more has been done to aid Wall Street through the back door of the Federal Reserve than through the front door of Congressional appropriations.

The tally shows that more scrutiny needs to be given by policymakers and the media to the role of the Federal Reserve especially as the Fed has accounted for the vast majority of the bailout funds, yet provides far less disclosure and is far less directly accountable than the Treasury.

Download the Financial Crisis Tracker

In addition to a comprehensive here Wall Street Bailout Table which will be updated monthly as a resource for press and the public, CMD is also making available a Financial Crisis Tracker, a widget that links to the table that can be downloaded to websites and provides up–to-date numbers on the financial crisis and the bailout. The Financial Crisis Tracker shows unemployment rates, housing foreclosure rates and the bailout total on a monthly basis. It is a more accurate measure of how we are doing as a nation than any Wall Street ticker.

* Key Findings

* Wall Street Bailout Table

* Financial Crisis Tracker

Among the Key Findings:

1) $4.6 Trillion in Taxpayer Funds Have Been Disbursed

All together, $4.6 trillion of taxpayer funds have been disbursed in the form of direct loans to Wall Street companies and banks, purchases of toxic assets, and support for the mortgage and mortgage-backed securities markets through federal housing agencies. This is an astonishing 32% of our GDP (2008) 130% of the federal budget (FY 2009).

2) TARP vs. Non-TARP Funding

Most accountings of the financial bailout focus on the Troubled Asset Relief Program (TARP), enacted by Congress with the Emergency Economic Stabilization Act of 2008. However, a complete analysis of the activities of all the agencies involved in the bailout including the FDIC, Federal Reserve and the Treasury reveals that TARP, which ended up disbursing about $410 billion was less than a tenth of the total U.S. government effort to contain the financial crisis. TARP funds only account for about 20% of the maximum commitments made through the bailout and less than 10% of the actual funds disbursed.

3) The Federal Reserve has Played the Primary Role in the Bailout

The Federal Reserve has provided by far the bulk of the funding for the bailout in the form of loans -- $3.8 trillion in total. Little information has been disclosed about what collateral taxpayers have received in return for many of these loans. Bloomberg News is suing the Federal Reserve to make this information public. On March 19, 2010 Bloomberg won its suit in the Second Circuit Court of Appeals, but it is not clear if this case will continue to be litigated to the Supreme Court.

4) Federal Support for the Housing Market is on the Rise

A key component of the bailout has been the federal support for mortgages and mortgage-backed securities, primarily through the Federal Reserve. All together, the government has disbursed more than $1.5 trillion in non-TARP funds to directly support the mortgage and housing market since 2007.

Mary Bottari

Mary Bottari, CMD's Deputy Director, is an experienced policy wonk and consumer advocate who has served as a senior analyst on trade.

Comments

The word "cost" is used incorrectly to describe the $4.6 Trillion dollars used to prevent the failure of the US financial system in the past crisis. Please read the Washington post article which says that the total cost of Tarp will be approximately
$100 Billion and most of that for AIG! I am sure the same holds true for the $3.6 Trillion of LOANS which were made. I believe that in some cases, the government is actually going to make money off of its loans. Please be more responsible in your reporting in the future.

Ronald Hirsch:
I’m troubled by your criticism of this research paper based on their use of the word “cost.” At this phase these programs and all the funds dispersed so what other word would you suggest? No matter how one describes these taxpayer bailouts they are a cost, or an outlay, or an investment until all the money and any expected return is actually paid back and available to the public for other needs. Until that time these funds are locked up and committed and any expectation of repayment is speculation at best.

Thank you for your comment. Our materials accurately describe the Federal Reserve funds as loans. The funding is not directly from tax coffers, but it is the taxpayer's money, and taxpayers will be ultimately responsible for the Fed's actions. In this instance, the Fed is making a lot of risky loans and is not revealing publicly what it is has accepted as collateral for these loans (this is what the Bloomberg News Freedom of Information Act suit is about), nor is it saying much about the $1 trillion in (toxic?) mortgage backed securities it has purchased. Fortunately, Bloomberg is winning is case in the federal courts and taxpayers may soon learn more about our chances of ever being paid back for this extraordinary effort to prop up the financial sector.

According to a Democrat appointee to the independent advisory group investigating the FNMA/Freddie Mac fraud last week she assets there are and estimated $16Trillion in notional value of derivatives of which may have no value on the books of the government and various financial institutions. This didn't raise an eye from the executives or other members of the panel. The regulators are ignoring this and are not even estimating their market value for fear of reprisals from the bi-partisan politically connected class.

On top of this the Federal Reserve has 50:1 leverage which means a slight increase in interest rates, which they have manipulated for years, would wipe their 2.5% equity out in a heartbeat. The Fed refuses to open their books even to those of questionable veracity in Congress who have started this over-leveraging mess in the first place..

Evidently the cost of the bailout is substantially higher than anyone really knows and if anyone does they aren't talking. Transparency is fiction only relevant during political campaigns.

True cost? Does anybody really how this can be paid back? The facts are when the Fed lends money they are actually creating money (see Money Mechanics by The Federal Reserve) . They only create the principal amount, they do not create any moneys to pay the interest or service this principal amount, There is no possible way to ever totally pay this debt back there is not enough money to do so. The only way to pay all of this money back is to borrow a larger sum of money equal to the principal and interest due on the previous loan, again this money will be created by the Fed as a loan accept now we had to borrow more then we did on the previous loan. Again the Fed will only create the principal amount not enough to pay the interest. on the new loan. So has we borrow ever increasing amounts to service and payback the previous debt the amounts of monies we need to borrow are perpetually multiplying. Eventually just to service this multiplying debt we will be unable to pay off any of the principa/ We eventually only will be able to pay the interest and we will have to start borrowing to do that, because the interest will eventually be more than than a 100% of total income. Wow sounds like loan sharking isnt that illegal?

Forgetting, if you will about what was done during the Bush Administration, but looking at the Obama time frame, the Treasure claims a sizeable profit.

i don't think you reported this with accuracy from the view of who was responsible for what.

I'd like to see the Treasury answer to your post.

Read Harv: http://TheHarvView.blogspot.com

TARP is all people seem to remember and we are always being told that TARP has been almost paid back. Too bad TARP only accounts for a fraction of all the federal aid given to Wall Street. These same banks that gambled the world economy away were able to borrow money from the Federal Reserve (aka you and me) at ZERO percent interest and then loan it back to the government (aka you and me) for a profit! Thanks for the sharing / Church Financing