Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter
Jason Linkins
Sep 22, 2008
http://www.huffingtonpost.com/2008/09/22/
dirty-secret-of-the-bailo_n_128294.html
A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. [..] just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.
Showing posts with label taxpayer. Show all posts
Showing posts with label taxpayer. Show all posts
Thursday, September 25, 2008
Thursday, August 28, 2008
How Much Will Government Bailouts Actually Cost The American Taxpayer?
How Much Will Government Bailouts Actually Cost The American Taxpayer?
Richard Benson
Benson's Economic & Market Trends
August 11, 2008
http://www.financialsense.com/editorials/benson/2008/0811.html
What is this economic disaster going to cost the taxpayer? Let's try to add it up.
The Federal Reserve: Let's say the Fed gets stiffed for $10 billion, a modest sum. That translates into $10 billion less in profits from the Fed to send the US Treasury, and $10 billion more for the taxpayer to pay.
Student Loans: We estimate that several hundred billion of student loans are outstanding, and the average debt per student is $20,000. Conservatively, put the cost down at $20 billion.
Pension Benefit Guarantee Corporation: This government agency insures $2.5 trillion in Defined Benefit obligations. The PBGC covers 30,000 business plans and 44 million workers. The PBGC charges an insurance fee and has $55 billion in assets. Let's put the cost to the taxpayer at a conservative $30 billion.
Federal Housing Administration: The FHA has given insured single-family mortgages to about five million people and 17 percent (or one in six) are delinquent. These catastrophic losses represent the worst of "cash for trash" lending that is crushing financial institutions in subprime. Conservative cost is $20 billion.
Small Business Administration: At the end on 2007, the balance of these SBA loans totaled $235 billion, with cumulative losses of about six percent. But don’t let history of only 6 percent losses fool you. As the economy turns down, many of the businesses with SBA loans will fail. For now, let's put this bill at a $20 billion loss.
Federal Home Loan Banks: The FHLB has over $1 trillion in assets, but what are these assets really worth? Well, a lot of mortgages that went into the collateral are Alt-A loans (interest only, no income verification, principal deferred). The real challenge, though, will be between the FHLB and FDIC as they fight to determine who gets stuck with the losses when the banks, thrifts, and credit unions fail. Either way, we’ll foot the bill. Let's put this one down for $50 billion, which is only five percent of the assets of the FHLB.
Federal Deposit Insurance Corporation: Even if a large portion of the bad single-family mortgage debt can be pushed back into the FHLB or over to Fannie Freddie, total losses on construction, commercial properties and consumer loans will easily cost the FDIC, and therefore the US taxpayer, $100 billion. If the government encourages people not to pay their mortgages and live rent free at our expense, we’ll need to increase the expected FDIC bill to the American taxpayer to $150 billion.
Fannie Mae and Freddie Mac: With a record number of homeowners considering whether to live free for 300 days by skipping their mortgage payments, imagine the cash gap that will open up between the cash that comes into Fannie & Freddie from mortgage payments, and the cash that must go out to cover the GSE security payments. For the government, it is more important to spread the losses into the future than to minimize them. Losses on defaulted mortgage loans at the GSEs will be horrible. Put the bailout cost at $300 billion.
Richard Benson
Benson's Economic & Market Trends
August 11, 2008
http://www.financialsense.com/editorials/benson/2008/0811.html
What is this economic disaster going to cost the taxpayer? Let's try to add it up.
The Federal Reserve: Let's say the Fed gets stiffed for $10 billion, a modest sum. That translates into $10 billion less in profits from the Fed to send the US Treasury, and $10 billion more for the taxpayer to pay.
Student Loans: We estimate that several hundred billion of student loans are outstanding, and the average debt per student is $20,000. Conservatively, put the cost down at $20 billion.
Pension Benefit Guarantee Corporation: This government agency insures $2.5 trillion in Defined Benefit obligations. The PBGC covers 30,000 business plans and 44 million workers. The PBGC charges an insurance fee and has $55 billion in assets. Let's put the cost to the taxpayer at a conservative $30 billion.
Federal Housing Administration: The FHA has given insured single-family mortgages to about five million people and 17 percent (or one in six) are delinquent. These catastrophic losses represent the worst of "cash for trash" lending that is crushing financial institutions in subprime. Conservative cost is $20 billion.
Small Business Administration: At the end on 2007, the balance of these SBA loans totaled $235 billion, with cumulative losses of about six percent. But don’t let history of only 6 percent losses fool you. As the economy turns down, many of the businesses with SBA loans will fail. For now, let's put this bill at a $20 billion loss.
Federal Home Loan Banks: The FHLB has over $1 trillion in assets, but what are these assets really worth? Well, a lot of mortgages that went into the collateral are Alt-A loans (interest only, no income verification, principal deferred). The real challenge, though, will be between the FHLB and FDIC as they fight to determine who gets stuck with the losses when the banks, thrifts, and credit unions fail. Either way, we’ll foot the bill. Let's put this one down for $50 billion, which is only five percent of the assets of the FHLB.
Federal Deposit Insurance Corporation: Even if a large portion of the bad single-family mortgage debt can be pushed back into the FHLB or over to Fannie Freddie, total losses on construction, commercial properties and consumer loans will easily cost the FDIC, and therefore the US taxpayer, $100 billion. If the government encourages people not to pay their mortgages and live rent free at our expense, we’ll need to increase the expected FDIC bill to the American taxpayer to $150 billion.
Fannie Mae and Freddie Mac: With a record number of homeowners considering whether to live free for 300 days by skipping their mortgage payments, imagine the cash gap that will open up between the cash that comes into Fannie & Freddie from mortgage payments, and the cash that must go out to cover the GSE security payments. For the government, it is more important to spread the losses into the future than to minimize them. Losses on defaulted mortgage loans at the GSEs will be horrible. Put the bailout cost at $300 billion.
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