That was the promise when the bailout crap was sold to the American people, that in the long run the taxpayer will make money off the bailout.
Two key Republican lawmakers say there’s a powerful silver lining in the taxpayers’ $700 billion bailout of the financial system: It has already earned the government more than $8 billion in profit.
The problem is, that supposed gain is an illusion. Even the accountant whose research they’re citing says he’s sorry he came up with the numbers.
The government paid $350 billion to buy stock and warrants — similar to stock options — in the nation’s banks. Accountant James A. Bianco said he came up with the profitability figure by assuming those warrants were free. So even though their value has plummeted, they still show up on the plus side of Bianco’s balance sheet.
In a Jan. 4 opinion piece in The Wall Street Journal, Sen. Judd Gregg, R-N.H., wrote, “the estimate to-date is that the (bailout) has actually had a gain of about $8 billion, while recapitalizing the financial system.”
Gregg, the senior Republican on the Senate Budget Committee, is a key backer of President-elect Barack Obama’s effort to gain access to the second half of the bailout money.
Earlier, Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, said in a statement that the $8 billion “initial profit for taxpayers … provides cause for optimism” and “demonstrates the value of transparency in the process.”
Financial researcher and writer Barry Ritholtz said the entire approach was flawed.
“It’s laughable — I can’t imagine anyone takes that seriously,” said Ritholtz, who is chief executive officer and director of equity research for the investment firm Fusion IQ. “You can’t take one slice of what the government did out of the trillions invested and say, ‘Look, we’re up billions of dollars!'”
To say the Treasury has made money, he said, “you have to say all the other spending came back,” including guarantees on assets from the now-defunct investment bank Bear Stearns and insurance giant American International Group Inc.
Let us go to another spot……..the taxpayer will make money….just how will that work? Will I get a check? Or maybe a direct deposit to my account? Just how will I make money?