What ‘One-Time Charges’ from F2008-F2010
May Look Like on Net Basis Over Next 10 Years
One-Time Charges from the ‘Financial Crisis’ are Not Created Equal — While TARP Was the Headliner, When All’s Said & Done, TARP may be Smallest Component, by a Long Shot
Current Cost /|Ultimate Cash Cost ($B, as of 2/11) ($B, by F2020E) |Comments
May fall from net $214 billion to $51 billion or less! as banks continue to pay back their loans and automakers / AIG seek IPOs / sales to realize value of USA Inc.’s equity stake.
May grow from net $152 billion to ~$160 billion (or higher)? as Fannie Mae and Freddie Mac losses on loan guarantees stabilize and they continue to pay dividends on USA Inc.’s shares.
TARP $214B — —|— > <$51B"
GSE $152 — —|— > ~$160?
Should rise from $177 billion to $417 billion? based on commitments...and a payback plan was never factored into these payments.
ARRA $177 ——|— > $417
Note: 1) Latest Treasury estimate as of 12/10, includes net profits from banks of $16B, net costs from AIG ($5B) / Automakers ($17B) / Consumers & Housing programs ($-46B) and other. AIG net costs excludes potential gains from selling AIG’s common shares held by the Treasury, which could turn out to be a $22B profit for the Treasury based on 10/1/10 closing price. Including this potential gain, TARP ultimate cost to the Treasury would be $29B. 2) White House OMB estimates ultimate cash cost of Fannie Mae / Freddie Mac at $165B while the CBO estimates the ultimate cash costs at $160B. Both estimates imply an average default rate of 5-10% on Fannie Mae + Freddie Mac’s $5T loan guarantee portfolio and a loss severity of 50%. The Federal Housing Finance Agency (FHFA) estimates ultimate costs to range from $142B to $259B. 3) Net cash costs are limited to discretionary spending items in ARRA. Source: CBO, U.S. Dept of Treasury, White House
OMB, FHFA. BSF owe noo com USA Inc. | Income Statement Drilldown 205
206
HOUSE_OVERSIGHT_020944