US to make profit from bailouts, Treasury says
- 15 April 2012
- From the section Business
The US will make a profit from bailing out the nation's banks and carmakers at the height of the financial crisis, the Treasury Department has said.
The bank bailouts may result in a return of $2bn (£1.3bn), the Treasury said in its latest projections for the government's response to the crisis .
And the recovering auto industry has added 230,000 jobs as a result.
The recession was the worst since the Great Depression and $19.2tn of wealth was wiped out, it said.
"Although the economy is getting stronger, we have a long way to go to fully repair the damage the crisis has left behind," the Treasury said.
"We are still living with the broader economic cost of the crisis, which can be seen in high unemployment."
The vast majority of the projected returns - more than $179bn - come from the Federal Reserve's huge investments and loans to banks.
The Fed and the Treasury together invested $182bn just to save insurance giant AIG.
In terms of the bank bailouts, the much-maligned Troubled Asset Relief Program (Tarp) that provided money to more than 700 banks has already realised a $19bn profit.
The bailout of carmakers General Motors and and Chrysler - which was also part of Tarp, cost $22bn, the Treasury said.
"But the cost of a disorderly liquidation to families and businesses across the country that rely on the auto industry would have been far higher," it added.
The US Treasury still owns more than 30% of GM's ordinary shares.
In the end, the Treasury expects to make $22bn from Tarp's bank bailouts and $2bn on Tarp's loans to restart the credit markets, offsetting the auto bailouts.