With all the different programs being undertaken by the federal government to rescue the economy, it’s hard to keep straight everything that taxpayers are now on the hook for.
That’s especially true because the commitments are being made by several different government agencies (primarily the Treasury Department and the Federal Reserve) and even more so, because they come in a range of forms.
Some of these commitments — for instance, the Treasury’s bailout program — represent actual spending. We could see a return on these investments, of course, depending on how the companies that we’ve taken on fare going forward, but there are by no means any guarantees.
Others, meanwhile, represent loans backed by collateral, meaning the government would have had to have badly miscalculated for us not to be paid back in full, probably with interest. And some are simply loan guarantees.
So putting an exact figure on exactly how much we’ve put up doesn’t tell us much. But here’s our best attempt, based on piecing together several reports, at a non-comprehensive rundown of the major components of the government’s effort to stave off a financial collapse.
Spending:
– The Troubled Assets Relief Program, in which Congress allocated $700 billion to the Treasury to buy equity stakes in financial institutions.
– A Federal Reserve program, announced in October, to buy up to $2.4 trillion in commercial paper that companies use to pay bills. That figure represents what eligible issuers could sell, but the Fed has said it does not intend to buy anywhere near that amount. Earlier this week the Washington Post put the amount that it had so far put up at $266 billion.
– A combined Fed-Treasury effort, announced yesterday, to buy up to $800 billion in mortgage- and asset-backed securities, in order to unfreeze credit markets.
– A Fed program, announced last month, to purchase up to $600 billion in US dollar commercial paper and certificates of deposit, in an effort to provide liquidity to money markets.
– The Citigroup bailout, announced over the weekend, in which Treasury, the Fed, and the FDIC have agreed to shoulder up to $249.3 billion in losses from the company’s risky assets.
– Since September, Treasury has spent at least $26.57 billion in making direct purchases of mortgage-backed securities. It has said it will continue to make such purchases in the months ahead, reports CNBC.
– Treasury has also spent $200 billion combined to prop up Fannie Mae and Freddie Mac, by purchasing preferred stock when they were taken over by the federal government back in September.
– And according to CNBC, it has spent up to $144 billion in additional mortgage-backed securities purchases by Fannie Mae and Freddie Mac, since their portfolio limits were expanded at the time.
– Meanwhile, the Federal Housing Administration spent $300 billion to refinance failing mortgages, in an effort launched this fall to rescue the housing market.
– And the $29 billion in financing in March for JPMorgan Chase’s government-brokered buyout of Bear Stearns.
– The Fed has made up to $900 billion in loans to financial institutions. As of Nov. 19, it had extended $415.3 billion in credit.
– The Fed also has continued its regular discount window lending, but at a much higher volume than normal. It loaned $91.5 billion last week, up almost 200 percent from the usual weekly average of $48 million over the last three years, according to Bloomberg News.
– The Fed and Treasury will support AIG to the tune of $152.5 billion, in equity purchases and loans, it was announced earlier this month.
– The FDIC last week announced that it will make available up to about $1.4 trillion in loan guarantees, to encourage bank-to-bank loans.
