You Don’t Have TARP’s Automotive Industry Financing Program To Kick Around Anymore

Author:
Jon Shazar
Updated:
Jan 14, 2019
Original:
Dec 22, 2014

Or Ally Financial, for that matter. (Well, you can continue to kick Ally Financial around, but if you’d like to do so as a shareholder, which every American citizen has sort of been for the last six years, you’ll actually have to buy your own shares now.)

The U.S. government closed a chapter in financial-crisis history Friday when it sold its remaining shares of Ally Financial Inc. and shuttered its auto-bailout program, ending the last major pieces of a $426 billion rescue package that saved a swath of U.S. companies but never won public support.
The Treasury Department said the 2008 Troubled Asset Relief Program has netted a small profit, returning $441.7 billion on the $426.4 billion invested….

Bank Bailouts Approach a Final Reckoning [WSJ]

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President Obama has decided that CFTC chief Gary Gensler, unlike most of his first-term economic team, is worth keeping around. Gary Gensler agrees. Now if only they could figure out in what capacity.

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The Federal Reserve has this new paper out about TARP that does a bit of highly suggestive eyebrow raising about some banks that shall remain nameless. They start from the awkward fact that TARP wanted everything in one bag but didn't want the bag to be heavy, or as they put it: The conflicted nature of the TARP objectives reflects the tension between different approaches to the financial crisis. While recapitalization was directed at returning banks to a position of financial stability, these banks were also expected to provide macro-stabilization by converting their new cash into risky loans. TARP was a use of public tax-payer funds and some public opinion argued that the funds should be used to make loans, so that the benefit of the funds would be passed through directly to consumers and businesses. So you might reasonably ask: were TARP funds locked in the vault to return the recipient banks to financial health, or blown on loans to risky ventures, or other? Well, here is Figure 1 (aggregate commercial and industrial loans from commercial banks in the U.S.): So ... not loaned then. But that's not important! The authors are actually looking not primarily at aggregate amounts of loans but at riskiness of loans and here's what they get:

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