Well Hrm. never heard of propublica.org.... LOOKS to be a smoking gun type organization, that remains to be seen whether it's really just an intellectual's tabloid.
That said, this came out across all major financial publications also on April 2, 2013:
www.businessinsider.com/fannie-mae-reports-its-most-profitable-year-in-history-2013-4Now while I must rely on published figures for FannieMae profits, I can tell you from personal experience, up close and in face, FannieMae's new money making scheme, and I posted it earlier, is brilliant and incredibly effective, that benefits every single aspect of the housing market and recovery. They are almost single handedly raising real estate prices nationwide, and it is one of the most amazing money making plans I've ever seen, one which benefits everyone. Heck. I may just go put my money where my mouth is today on FNMA.
Now, back to your Propublica page on FannieMae and FreddieMac. Bottom of page:
Unlimited
Total Allocation
Disbursed
$187B
Revenue
$65.2B
Net Outstanding: $122B
The total amount invested in Fannie and Freddie so far is $187B. They have returned none of the money invested so far—and might never do so.
The Treasury has been earning a return on its investments. So far Fannie and Freddie have paid $65.2B in dividends to the Treasury.
Ok... so reading the above from propublica, it seems clear they don't understand the point of a bank, yet are publishing about banking.
Banks make money by lending. So simplified, lets say you deposit $100 to the bank...they give YOU .025 interest, and then loan your money to that business over there, and charges them 3.75% interest, so they made $3.75 for the price of .023 cents. That's how they make money. Alternatively, they take your $100, and pay your credit card bill with it... and charge the vendor 3% for using them, then charge YOU 12% for paying the minimum instead of the entire balance, at a cost of .025 for that money. This makes them more money. In between this spread is typically where the bank makes for every dollar.
But your $100 isn't INVESTMENT in the bank... it's YOUR $100, not the banks, and it better be there when you go to withdraw it. So what is it? A LOAN? Your money is a loan to the bank to make money loaning to someone else? Yep. But one that you can go get back when you want.
Since the bank's loaning your money... and not their money... what do they call your money? How do they see the bailout money differently? Well, they don't?
Now... is your $100 accounted as REVENUE? No. The bank can't keep your money.
So back to propublica's math. It says that the Gov't gave Fannie and Freddie 187B. Is that a gift? No. Is that Revenue? Course not. What is it? An investment? Yes. A loan? Yes. Similar to your $100.
Well, do you consider an investment a loss? When you put your $100 in the bank, why did you do it? Because you want them to make money with your money? No, you wanted the .025% and the liquidity.
Now... back to propublica. REVENUE so far is 65.2 billion. But wait! The gov't LOANED(or deposited?) 187B, and they ONLY made $65.2B!! LOOK!! They are NOT profitable!!!
That's like saying that when the bank takes your $100 deposit and pays you .025, then loans it out at 3.75% interest, they are not profitable. REALLY? That $100 is not the bank's. It's YOURS. And your money makes them income. But it isn't considered a loan to the bank, or revenue to the bank, or gift to the bank. It's STILL YOUR MONEY, and it's there collecting the bank's interest to you of .025.
My point is, Fannie and Freddie are making money with that money. It's not a LOAN, it's not a GIFT, and while it's a bailout, it's not free money they got to keep. They turned it into more money... that's the revenue part. Yet Propublica calls it a loss. How?
I may be lousy at explaining, and this may be hard to follow, but surely you can follow the logic of how ass-backwards and fuzzy math of propublica in this one example.
Well, I can't say I know the specifics of the other bailouts, but if they are applying fuzzy math to 1/3 of their dedicated page, I have to question the validity of the other 2/3.
Most articles do not cover the entirety of TARP, just parts of it. Here's ANOTHER part that's making money the 245B banking portion of TARP... I have no personal experience with this, but the writer seems pretty happy with the profit (and if you look at stocks, you can SEE the insane increase of bank stocks since TARP- the Gov't is in on this profit and holds some of this stock - in some cases, some bank stocks have risen 400%... whoa profit):
www.bizjournals.com/philadelphia/print-edition/2013/01/18/the-government-has-made-23-billion.html?page=allEarlier, I linked the profit from the AIG's 67.8B portion of the bailout... forgot where that article was, here's another:
abcnews.go.com/Business/government-makes-177-billion-profit-aig-bailout/story?id=17074275#.UV7cApDD9D8- this one, there's some 'watchdogs' that dispute the profit figure, a lawsuit, and some fuzzy math. Who knows. But one side says 17B profit to date, other side says fuzzy math. Out of 605B spent, that dispute is over whether AIG's bailout resulted in a 17B profit?
To your last paragraph:
Neal Barofsky, former special inspector general for the Troubled Asset Relief Program . . . TARP wasn’t solely about avoiding a meltdown. It was “helpful in avoiding a collapse” but it was also supposed to restore lending and preserve home ownership and there it “failed, and failed miserably.”
BULL. It's working. I'm watching it work up close and personal, and I'm delighted. Mr Barofsky is WRONG. We'll know for sure in 2 years when all that troubled inventory is cleared away, but so far, it's working impossibly well.