Bank Bailouts in US and other Countries (Ireland esp)

In the news you hear a lot of popular anger in certain European countries because certain government “bailed out” the banks. I am not really up on the detail of every country, but apparently this was a really big deal and has cost the governments a lot of money. This has been getting more headlines recently about Ireland because they are coming up on (or had) an election.

Were these countries less successful at bailing out bank than the US? Where the US banks inherently in better condition than these European banks? The US bank bailout “TARP” is expected to recover 96-97% of its “bailout” fund ($25-28B loss out of $700B) . On many banks TARP made a profit. (Citigroup).

Why did things work out (relatively) well on the US side, and not so well in other countries in terms of bank bailouts?

Just to clarify, $700B was what was authorized. They never actually invested that amount. Also, the bank portion of TARP is expected to recover 100% of its funds. TARP also includes auto bailouts, AIG, and a home mortgage modification program. Those are programs where the loss is still projected.

Also, TARP funds to banks were not the only “bailout” program involving banks.

TARP was a failure, the US is broke. Of course the banks show a profit, they looted the money from the people, they looted this country.

If anything, the people of Ireland, Greece, ect are smarter because they will not let them selves be made to pay the bill for the banksters fraud. Americans just believe the propaganda and think that TARP led us into a recovery. Actually, its even worse than that, the believe the victims of this fraud caused all the problems in the first place. As long as we have that attitude, things will never change.

The reality is we should be marching in the streets, just like the Irish and Greeks. There my still be hope, at least Wisconsin is waking up.

You can debate whether the TARP program was a good idea, but there’s no debating the fact that the net cost to taxpayers was zero. When you include interest, the bailout recipients have already paid back more money than the federal government loaned out.

Ironbender’s rant shows a complete ignorance of what’s going on in Greece and Ireland. The Irish banks did get a government bailout, which unlike TARP won’t be repaid. (Some banks were even nationalized.) The Greeks have had huge tax increases and pensions have been slashed. Saying that the Greeks and Irish “are smarter because they won’t pay the bill” is ludicrous. They’re paying a huge price, and folks in the US haven’t paid anything.

Don’t forget that there’s another, ongoing, bailout happening: Fannie Mae and Freddie Mac, which have guzzled up something like $150 billion, and are still requiring regular infusions of cash. And it seems like most economists think that the money is gone forever.

Moderator Note

ironbender, political commentary of this kind is out of place in General Questions. If you want to rant about bank fraud, take it to the Pit.

General Questions Moderator

Unfortunately that’s exactly what the Irish people will do. They’ve just elected a party to lead the next government who are committed to a deal that will force the Irish people to pay the bill. Although it’s not entirely clear where the money is going to come from, we certainly can’t afford it.

But wasn’t much of the pressure on banks temporary (i.e. liquidity/confidence crisis, rather than long-term insolvency)? If so, banks making good on such loans was expected.

IIRC, Warren Buffett did very well with a sweetheart convertible bonds deal with G.E. at the height of the crisis. I wish U.S. Treasury had also tried to make deals for nice taxpayer profit. Or did they?

Is there a good objective on-line summary of TARP etc. showing financial results to Treasury and comparing with what they could or should have got?

That’s the question that I am trying to figure out. Why won’t the Irish banks pay back their bailout? Were they just that much horribly in debt compared to other banks? Did the Irish government think they were going to get paid back?

Less successful? What would the goal be, is my question - to decide whether something has been successful, you need to know the goal, and I don’t know what the goal of the Spanish bailouts was.

In Spain the problem is that, as far as I, FinanceBro or anybody we know can tell, the bank bailouts we’ve had recently weren’t needed or weren’t deserved: many of the banks affected weren’t about to go under or anything, they were just (horror of horrors!) going to make less money than previous years instead of, or example, “having 700M more net benefit than the previous year while continuing with their policy of firing anybody who’s at the end of his/her ‘practice contract’” (where those are ‘trash contracts’ which allow companies to pay less than minimal pay because in theory they’re training you). Others were about to go under due to a long history of bad management; why were they allowed to run wild, and then bailed out? I don’t know.

Mind you: it may still make sense macroeconomically and not only in terms of who do they play golf with, and I and the people I speak about these things with simply don’t have enough information to understand the macroeconomical reasons.

Bailing out the banks isn’t too popular here in the UK, either!

The activities of the banks were the cause of everyone’s economic difficulties. The banks gambled, and lost. Rather than having to suffer the consequences of that, in many cases they’ve been bailed out by the state. The banks are now mostly back in profit, and are showing no real signs of having learned their lesson, while the public are left to pick up the pieces.

The banks aren’t the only people to blame for all the different problems, of course. But while the government is aiming to make huge cuts, the banks are paying some of their stuff ridiculous bonuses once again. And millions of ordinary people face the possibility of losing their job and/or home over the next few years.

Is it any wonder that people are angry?

At least UK government now has huge (non-voting) equity positions in some of the most (before, and will be again) profitable companies in the world. Still, we’re all in this together!

Well, the plan was similar to TARP…the Irish banks were supposed to pay back the bailout money with interest. Some, like Anglo Irish Bank weren’t able to function despite the infusion of billions and the government ended up taking over the bank.

But the problem in Ireland is that the slow recovery meant other banks needed bailouts, and the increasing debt created a downward spiral in the Irish economy that affected other banks and forced more bailouts… and eventually the Irish government need it’s own bailout from the EU.