The new spin on TARP

We are a little more than a month away from a Congressional election and, surprise, what do we see but a series of stories and editorials about how the Troubled Asset Relief Program (TARP) will end up costing taxpayers much less than expected.  Remember in 2008 how alarmed we all were at the prospect of TARP costing as much as $700 billion?  The good news is that AIG and big banks such as Citigroup and Bank of America will return all TARP funds.  Right now estimates of the ultimate cost range between $66 and $105 billion. 

What the recent stories do not discuss: (1) no mention of the losses of Fannie Mae and Freddie Mac, estimated to be as much as $300 billion, and (2) no mention of the fine distinction between the TARP loans to GM and Chrysler (which have been repaid) and the direct Treasury loans (which await an IPO before we learn if there is anything to be repaid). 

The Bush and Obama administrations, plus Fed chief Ben Bernanke, deserve tremendous credit for preventing a complete financial meltdown in 2008-09.  The fact that most of the TARP funds are being repaid is without a question welcome news.  But TARP was not the only bailout game in town and the jury is still out on how the home mortgage and auto bailouts will play out.