Each time someone in Washington tries to talk about the enormous profit generated, it makes me think about the rest of the story that they've glossed over. For starters, the unemployment rate has skyrocketed and last time I checked, there's a heavy cost there. Between the hard times for families plus the lack of tax dollars being paid, the numbers are significant. Also, what about the trillions of free money handed out? Yes, TARP itself was $700 billion but that was only a part of what the government did to rescue the most arrogant and selfish people on the planet. The trillions lent out was a very big deal and they kept many banks afloat so that's another cost.
And now there's this. The TARP profits are around a third of what they could have been out in the real world. It's clear that when the tables are turned the banks will take full advantage of everyone else. ($5 ATM fees are the cherry on top.) What probably doesn't help the situation in "negotiations" between the government and Wall Street is the always spinning revolving door. A real negotiation where market profits are normal would ruin a job opportunity for the future so they will never happen.
The original first eight recipients received $165 billion in exchange for preferred stock and warrants. All eight banks have repaid their TARP funds.
The estimated annual rate of return on the government's investments in those banks was 10.5 percent, according to Dr. Linus Wilson, a finance professor at University of Louisiana at Lafayette.
While this is a far better return than TARP critics expected, it pales in comparison to what a private investor would have made. Private investors who bought preferred stock in the same eight banks during that period received returns of 38.5 percent, according to Wilson’s analysis.
