Bailout loans paying dividends as banks rebound from recession

Tim Geither

Treasury Secretary Tim Geithner has just issued an update on bailout loans to banks and financial institutions, which made profits. Image from Wikimedia Commons.

The recession is definitely over for banks that got bailout loans from the taxpayers, and the bailout is now paying dividends. The portion of the Troubled Asset Relief Program that lent funds to banks with bad assets has made a profit, as huge banks and Wall Street firms are very profitable again. Relief programs for the housing industry have not been so successful.

Loans from the TARP program were good investments

The installment loans from the taxpayers to huge banks and investment firms under the Troubled Asset Relief Program were certainly a cause of controversy. However, according to CNN, the Department of the Treasury has reported that loans to banks and other entities in the financial industry have resulted in a $6 billion profit, which may grow to a $20 billion profit by the time all loans are repaid. TARP had $700 billion, and $432 billion has been spent.

Mortgage modification program cut

The federal mortgage modification programs have not been as successful as the government hoped they would be. As a result, the Home Affordable Modification Program has wound up on the chopping block, according to MSNBC. House Republicans were able to pass a bill that would terminate HAMP, but it may be a symbolic gesture, as a narrowly Democrat-controlled Senate and the Democrat President may not be as amenable to cutting the program. The program has been deemed a failure, as it has a success rate of less than 50 percent in modifying mortgages. Other mortgage relief programs are being targeted for elimination, but eliminating such programs would likely also be symbolic. Senate Democrats and the President may not be willing to cut the lifeline to troubled homeowners regardless of whether the programs don’t keep many from having to get same day loans and move out of underwater homes.

Wall Street feeling better about itself

A recent survey, according to Reuters, revealed that CEOs at large corporations were feeling better about the overall economy and were more willing to hire and try to expand their companies. Of the 142 CEOs that responded to the survey by the Business Roundtable, a trade organization for Chief Executive Officers at major corporations, more than half said they were going to start hiring people in the next year. If hiring at large firms picks up, that provides a boost to the middle class.





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