Tuesday, November 30, 2010

$700 Billion Bailout Update

From the Congressional Budget Office, another downward revision to the estimated cost of that "$700 Billion Bailout":
CBO estimates that the cost to the federal government of the TARP’s transactions (also referred to as the subsidy cost), including grants that have not been made yet for mortgage programs, will amount to $25 billion. That cost stems largely from assistance to American International Group (AIG), aid to the automotive industry, and grant programs aimed at avoiding mortgage foreclosures: CBO estimates a cost of $45 billion for providing those three types of assistance. Other transactions will, taken together, yield a net gain of $20 billion to the federal government, CBO estimates.

It was not apparent when the TARP was created two years ago that the costs would be this low. 
Indeed.  And I don't think its apparent to most people now that the costs were this low (which is a real problem, as I discussed in this previous post).

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