June 10th, 2009
04:34 PM ET
5 years ago

Taxpayers gain $2.7B on bailout 'investment'

NEW YORK (CNNMoney.com) – The government bailout of banks, lenders, Bear Stearns and AIG brought in billions of dollars to the Federal Reserve in the first quarter of 2009.

In the first of a series of monthly reports on its $2.1 trillion balance sheet, the Fed said it earned a net $2.7 billion from January through March. Most of the gains stemmed from new lending facilities that the Fed instituted after the collapse of Lehman Brothers brought the nation's flow of credit to a halt in September.

The U.S. central bank said it took in $1.2 billion on interest in loans in its Term Auction Facility (TAF) and to troubled insurer AIG (AIG, Fortune 500). TAF, which the Fed began at the beginning of the recession in December 2007, lends short-term money to banks in exchange for toxic assets as collateral.

The Fed also made $2.1 billion on its Commercial Paper Funding Facility, in which the government buys up companies' short term debt in exchange for interest and a fee.

Treasury bonds, which performed well in the first three months of the year, made the Fed another $4.6 billion. The Fed began purchasing long-term Treasurys in March in an attempt to reduce bond yields and interest rates that are tied to them.

But the Fed lost a whopping $5.3 billion on assets it took hold of after the Bear Stearns and AIG bailouts. The vast majority ($4.9 billion worth) of the losses were AIG-related, as the central bank bought up nearly $50 billion worth of toxic assets in exchange for loans to the company.

Bailout opponents have voiced strong concern about the government taking hold of toxic assets, claming that the value will only continue to deteriorate over time losing the taxpayers billions of dollars. But the Fed has maintained that market improvements over the next months and year will help increase the value of its holdings, and it may be able to sell many of those assets for a gain.

The report is part of of a Fed effort to increase transparency about its finances and bailout efforts, especially as it ramped up its balance sheet by more than $1 trillion since September. The Fed said it will issue the report on the second Wednesday of each month.


Filed under: Economy • TARP
soundoff (98 Responses)
  1. Denise

    When does my check arrive in the mail?

    June 10, 2009 08:21 pm at 8:21 pm |
  2. Mike

    The Republican party ( the party of failure) wants everything Obama does to fail. They want the country to fail, that is why they are sending all the jobs out of the country.

    June 10, 2009 08:26 pm at 8:26 pm |
  3. Glen

    "The Fed also made $2.1 billion on its Commercial Paper Funding Facility, in which the government buys up companies' short term debt in exchange for interest and a fee. "

    This is technically not correct. The U.S. government is owned and controlled by a small group of powerful and ultra-wealthy international bankers. You might know them by the name "Federal Reserve," which is anything but "Federal," it is not Federal at all. Instead of the U.S. simply paying people to print our money for us, which would make sense, the rich (and very smart) Banking foreigners print all our money, and then "loan" it to us!! Even though we've paid for it, we still have to pay it all back to them at some point.

    June 10, 2009 08:30 pm at 8:30 pm |
  4. james

    matt, the jobs would've been lost anyways if it was allowed to go bankrupt. the buy by fiat is less damaging.

    June 10, 2009 08:31 pm at 8:31 pm |
  5. Susan

    This is good news indeed! And I'm sure the Republicans will try to make it into something negative! They are ridiculous!

    Obama/Biden 2012!!!All the way!!!!!!!!

    June 10, 2009 08:56 pm at 8:56 pm |
  6. Independent_me

    I bet the Repugs will find something negative to say about this!

    June 10, 2009 08:56 pm at 8:56 pm |
  7. Republicans Are Like Beauty Queens That Got Last Place, they cry...and their moms complain about the judges.

    These Right wing nuts have lost their minds. Some almost sound like the Taliban. "Our way or the highway...now DIE way."

    Comparing the poor to leaches in society?

    I get confused by the Republicans...they claim to be the "Moral Party Of Christains, " yet they never act like Jesus.

    Now they are shooting doctors and security gaurds at musuems. God & Guns.

    June 10, 2009 09:03 pm at 9:03 pm |
  8. JohnS

    Other Contries would celebrate such success.

    Thank you President Barack OBAMA.

    A smart President.

    June 10, 2009 09:04 pm at 9:04 pm |
  9. Watchdog

    LOL. This story is just like the jobs "saved or created". Hey, last week I made $1,500.00 in Vegas on one poker hand!!! I'm a genius!!! Too bad the other 20 hands I lost a total of $90,000.00. But hey, I borrowed it so its OK... Yeah, I dont know how the economy works!! LOL

    June 10, 2009 09:05 pm at 9:05 pm |
  10. John

    I hope our politicians don't decide to spend it! Please pay down the debt!!!

    June 10, 2009 09:06 pm at 9:06 pm |
  11. Mike

    You libs are funny, you wine about the tarp money that Bush spent, then try to take credit for the small abount of proffit that it made. For those of you that cannot read or do math, the article states that the time period began in Jan. which would be Jan 1. which is before Obama took office, which means you cannot possible credit him with with this "profit".

    June 10, 2009 09:07 pm at 9:07 pm |
  12. Voter

    This is peanuts compared to what taxpayers have lost and continue to lose. CNN – ever about the business of making Obama look good.

    June 10, 2009 09:10 pm at 9:10 pm |
  13. Blue in Maine

    And what did Bush get for us from the 12 million an hour he spent on the Iraq War?

    June 10, 2009 09:15 pm at 9:15 pm |
  14. Dan, TX

    Not one comment here is from someone who understands the numbers. Of course, CNN doesn't understand them either.

    People should be asking questions about this, not spouting nonsense. This is why America is second rate. Our generation let America down.

    June 10, 2009 09:20 pm at 9:20 pm |
  15. A Brit in Utah

    When you deduct the losses they have taken over the investment in
    AIG and others, the difference won't even cover the interest. Well done.

    June 10, 2009 09:22 pm at 9:22 pm |
  16. xavier

    The ignorance of you GOP spinners is beyond belief! The GOP made the mess, and Obama is fixing it. Is that so hard for your tunnel vision to handle? Take your blinders off!

    June 10, 2009 09:27 pm at 9:27 pm |
  17. flagwaver

    Wow, sounds like this total economic meltdown emergency code red financial collapse worked out pretty good for the feds after all.

    June 10, 2009 09:36 pm at 9:36 pm |
  18. Keith in Austin

    To Big Papa!

    YOU and your Left Wing friends continue to astonish me. Wake up PLEASE! Barry and the Democrat Congress are spending our country into the stone age while you are blindly led down the primrose lane by MSNBC and the New York Times. 2 million more jobs have been lost since Jan. Man! The BEST way the GOP will regain power is OBAMA and the direction he is taking us right now!

    June 10, 2009 09:39 pm at 9:39 pm |
  19. Wedge

    Uhh, why has nobody pointed out that this is from the TARP that passed under Bush? Remember, the ones Democrats demonized at the time and still like to point and shout at about Bush's mismanagement?

    June 10, 2009 09:47 pm at 9:47 pm |
  20. Alpha and Omega

    The FIAT car industry has a rogue counterpart. It's run by the Italian Mafia. They earned a whopping $8 Trillion last year. They launder dirtry money with investments in legit entities. Hello FIAT. The parts industry is 4 to 1 rogue.
    I do believe the DEMS were hood-winked into thinking this was a legit company.
    Even from my day in Spain the parts were not that good. In Spain, it was SEAT!
    Oops! Hello, PBS – Special.!

    June 10, 2009 09:48 pm at 9:48 pm |
  21. Jason

    Wow

    We are lead to believe the fundamentals of our economy are yet again sound by the very economist who, just months ago, lead us blindly into this quagmire. Frankly, the average "post-partisan" Cnn reader needs to either grow up, or grow a brain. 2.7 billion dollars will do little to halt the onset of hyperinflation, will do nothing to get our jobs back, and will only find its way back into the grips of our overzealous, spending machine we call congress.

    You can send your gratitude towards both the Obama and Bush administrations for the destruction of our currency and the fast paced vanishing act our savings will soon preform.

    June 10, 2009 10:01 pm at 10:01 pm |
  22. Tatianna

    I do not champion words spoken by Rush. But I do agree with his stance saying – Did the dems want the war inIraq to fail? They certainly did. They not only wanted the war in Iraq to fail, they proclaimed it a failure. They hoped George Bush failed. So what is so strange about being honest to say that I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation? WHY WOULD I WANT THAT TO SUCCEED? -. Rush had it right...we elected a president, not a founding father. Dems try clever attempts to distort those comments by suggesting that reps are rooting for the countrys failure. But sane Americans are simply puzzled that Team Obama is engaged in a debate with Rush at all. I cant imagine Bush or Andy Card in a debate with Matthews, Olberman or Rachel Madow. Dems entire obession with conservative media and talk show host personalities like Rush, Hannity is bizarre. IT IS NONSENSE TO BELIEVE THAT CONSERVATIVES SHOULDNT OPPOSE AND BE ANGRY WITH WHAT OBAMA IS DOING TO THE COUNTRY.

    June 11, 2009 12:04 am at 12:04 am |
  23. Dee, 1 Vote

    Mr. GOP, 8 yrs Bush Jr and the Red GOP, didn't peotect Americs. Big "O" and The Team Of Change is hope not fight!

    June 11, 2009 01:59 am at 1:59 am |
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