In other words, the banks are on track not only to pay taxpayers back all the $200 billion plus we've lent them, but put a dent -- albeit a small one -- in our enormous budget deficits.
President Obama recently proposed a $90 billion tax on the banks to "recover every single dime the American people are owed." But if taxpayers really want their money back from TARP, which the CBO now estimates will cost $99 billion, they should go knocking on the doors of AIG (AIG, Fortune 500), GM, and Chrysler.
CBO projects the government will lose $9 billion from helping AIG, and another $47 billion from saving the auto industry. Yet another suck on taxpayer money: the $20 billion that will be lost from the Home Affordable Mortgage Program.
What's more surprising from today's numbers is that CBO estimates, in the near term at least, TARP is helping the budget: $67 billion for fiscal year 2010.
That's because last year CBO thought TARP would be much worse off, losing $356 billion in the program's lifetime; the agency went ahead and recorded $151 billion in subsidy costs for 2009. Since CBO's new, lower estimate on TARP's cost is $99 billion, to make up for last year's overly pessimistic outlook, it's recording a $67 billion profit on TARP for 2010.
Considering that this year's deficit is projected to be $65 billion less than last year's, we can thank TARP (and the bank's repayments) for the 2010 deficit's marginal improvement.
Who knew: When it comes to the $1.3 trillion federal budget deficit, the bank bailout portion of TARP isn't the problem. It's part of the solution.
Treasurys turn higher on recovery doubtsBank bailout likely to pay off
