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Will they pay the bailout money back? Yes, no and maybe.

TARP is among the most vilified federal programs in this country's history.

Two years later, the debate still rages over whether the federal bailout staved off financial ruin or was simply a handout to rich bankers and industry leaders.

But one thing is clear: Some of the big bailout recipients are doing a much better job than others in paying back taxpayers.

On one extreme is the rescue of mortgage giants Fannie Mae and Freddie Mac, which has already cost about $150 billion and the tab could grow by more than $100 billion. It's unclear how the government will ever recoup that investment. Then there's the bailout of megabank Citigroup, which resulted in a healthy profit for taxpayers.

TARP (the Troubled Asset Relief Program) was originally a $700 billion bailout targeting the country's banking industry, but quickly expanded to include a lot more. The expected losses were once estimated at $340 billion.

That number has now fallen to just $25 billion, according to the latest update from federal regulators.

Brookings Institution senior fellow Doug Elliott called it "the best large federal program ever to be despised by the public. … It would have been worth it even if it had cost the whole $700 billion. Instead, the program will be nearly a break-even proposition."

An alphabet soup of programs are tied to TARP, but much of the attention, and a significant dose of that vilification, centered on a handful of major companies.

Fannie Mae and Freddie Mac

What happened: Seized in 2008 by the Bush administration amid fears they could collapse, losing a key source of funding for residential mortgage loans. Since then, the flow of funds into the two companies has escalated in tandem with the housing crisis. Today, they own or guarantee more than half of the country's residential mortgage debt.

Status: Taxpayer aid will reach $224 billion by the end of 2012, of which $55 billion will be returned in dividends to the U.S. Treasury, according to President Obama's 2012 budget.

Will taxpayers be paid back? Not likely. The Federal Housing Finance Agency, which regulates both companies, said in October that the best-case scenario is doling out $221 billion in aid, or $142 billion after dividends. Worst-case scenario was $363 billion in aid, or $259 billion after dividends.

Fast fact: Since the government took over the two corporations, taxpayers have provided $162 million defending their executives from civil lawsuits alleging fraud.

From the archives: "I think Wall Street will get over it." — U.S. Rep. Barney Frank, D-Mass., talking about the possible collapse of Freddie Mac and Fannie Mae in 2004.

American International Group

What happened: The major insurer received an $85 billion emergency loan. The bailout eventually grew to more than $180 billion.

Status: Has sold off many assets to repay part of the loans. Recently paid back the $21 billion outstanding balance to the Federal Reserve Bank of New York. The Treasury Department is now the sole government supporter, with 1.66 billion shares that it got for just under $30 apiece.

Will taxpayers be paid back? Treasury Secretary Tim Geithner certainly thinks so. "Treasury remains optimistic that taxpayers will get back every dollar of their investment in AIG," he said recently. The Treasury said last month that it will break even if it can unload its stake at an average price of $28.72 per share. AIG closed Friday above $41. Selling all of its massive stake at once, however, would drive the price down.

Fast fact: AIG has sold, or is in the process of selling, at least $50 billion in assets.

From the archives: "AIG is holding the U.S. government hostage at gunpoint. The government can't cut its losses because it is too far into AIG. It has no choice but to keep on pumping money into the company." — Mark Williams, professor of finance and economics at Boston University and a former Federal Reserve bank examiner.


What happened: Among megabanks, Citibank received by far the most federal aid as it teetered on the brink of failure in November 2008. About $25 billion came through TARP's capital purchase program and a $20 billion capital infusion came in exchange for preferred shares of Citi stock.

Status: Citibank paid back $20 billion in December 2009. The Treasury began selling off Citi shares in 2009. Two months ago, the Treasury Department said it would unload its remaining 2.4 billion shares of Citi at $4.35 a share.

Will taxpayers be paid back? Yes, and then some. The $57 billion recaptured from the Citi deal translates to a $12 billion profit.

Fast fact: The consensus that Citi was too big to fail was "based as much on gut instinct and fear of the unknown as on objective criteria," government regulators said later.

From the archives: "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you got to get up and dance. We're still dancing." — Former Citibank CEO Chuck Prince in 2007.

General Motors Co.

What happened: Went through bankruptcy restructuring. The Treasury Department gave GM $49.5 billion in loans in return for $6.7 billion in debt in the new GM and $2.1 billion in preferred stock and a 60.8 percent common equity stake. The government has also invested a total of $17.2 billion in Ally Financial (formerly GMAC).

Status: GM closed a $15.8 billion initial public offering in December. The government sold a portion of its ownership stake for $13.5 billion, reducing its ownership stake to 33.3 percent. GM has also paid back the $6.7 billion in debt in the new company as well as the $2.1 billion in preferred stock. The Treasury's remaining investment in GM was about $27.1 billion as of January.

Will taxpayers be paid back? Too soon to tell. GM has been profitable again, but with so much of the investment tied to the stock market, the jury remains out. One report concluded that the decision to sell part of the government's stake at $33 "locked in" a loss of billions of dollars and sharply reduced the chances of a complete payback. The break-even price was $44.59 a share, the report said.

Fast fact: GM is giving its unionized U.S. hourly employees profit-sharing checks averaging at least $4,000 this year, more than double the previous record set in 1999.

From the archives: "If any one of them fails, it will create an endless vicious circle in the global economy as the auto sector hires so many and there are so many industries that rely on the sector." — Kim Jae-eun, economist at Hana Daetoo Securities in Seoul, defending an auto bailout in December 2008.

Chrysler Group

What happened: As part of the auto bailout, theTreasury provided $12.5 billion in loans to the old Chrysler and the post-bankruptcy group. The Treasury also received a 9.9 percent equity stake. Chrysler Financial also received a $1.5 billion loan.

Status: Chrysler emerged from bankruptcy in June 2009 and the government's equity stake was reduced to 9.2 percent after Fiat increased its ownership interest. Fiat's stake cannot go beyond 49 percent until the government has been paid back in full. The Chrysler Financial loan was repaid with interest.

Will taxpayers be paid back? Not imminently, if ever. Chrysler has narrowed its losses and has been considering a public offering in 2011 that would help pay down its debt. A new Rasmussen Report national survey last week found that 52 percent of adults think it is at least somewhat likely that all the taxpayer money invested in GM and Chrysler will be repaid.

Fast fact: Chrysler's new 2-minute ad touting the comeback of the company and of Detroit — featuring Detroit native rap star Eminem driving a new Chrysler 200 — was the longest commercial in Super Bowl history.

From the archives: "I'm concerned that this proposal asks taxpayers to further subsidize a business model that is failing to meet the needs of American workers and consumers." — Then-House Minority Leader John Boehner, opposing the Democrats' proposal for an auto bailout in December 2008.

Times wires contributed to this report.

Will they pay the bailout money back? Yes, no and maybe. 02/19/11 [Last modified: Friday, February 18, 2011 8:02pm]
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