The real bailout cost? $7.4 trillion
Posted
Nov 24 2008, 12:28 PM
by
Kim Peterson
Rating:
We were suckered into believing the bailout would only cost $700 billion. Turns out the government is set to lend at least $7.4 trillion to rescue the financial system, says Bloomberg. That's half the value of everything produced in the country last year.
How is this possible? In an impressive bit of investigative reporting, Bloomberg went out and collected data from the Fed, the Treasury and the FDIC to figure out the full extent of the government rescue effort. I suspect not even the government has done this kind of research on its spending programs.
How does the government blow through $7.4 trillion? Here are the ways:
$2.8 trilion -- Already been tapped by banks and other financial institutions
$2.4 trillion -- Set aside to buy short-term notes, or commercial paper, that companies use to pay bills
$1.4 trillion -- Used by the FDIC to guarantee loans banks make to each other
$29 billion -- To help with the Bear Stearns takeover
$123 billion -- Bailout for AIG
$326 billion -- Bailout for Citigroup
$200 billion -- Promised to Fannie Mae and Freddie Mac
$139 billion -- Loan guarantees for General Electric's finance unit
To put this into perspective: That money is equal to spending $24,000 on every man, woman and child in the country, Bloomberg says. It would pay off more than half of the mortgages in the U.S.
Related reading:
Fed pledges top $7.4 trillion to ease frozen credit
Insurance companies angle for bailout
Treasury defends bailout bait-and-switch
$50 billion of bailout going to employee bonuses
Economists criticize bailout plans
Who isn't getting bailout money these days?