Surprise! The big bad bailout is paying off

[Sgent]

FORTUNE -- The bailout of the financial system is roughly as popular as Wall Street bonuses, the federal budget deficit, or LeBron James in a Cleveland sports bar. You hear over and over that the bailout was a disaster, it cost taxpayers a fortune, we didn't really need it, it didn't work, it was a failure. It has become politically toxic, which inhibits reasoned public discussion about it.

But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are coming out ahead on it -- by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3% represented by the massively unpopular Troubled Asset Relief Program. Yes, that's right -- TARP is only about 3% of the bailout, even though it gets about 97% of the attention.

A key reason for the rescue's profitability is that the Federal Reserve System has already turned over more than $100 billion of bailout-related income to the Treasury, and is on track to turn over $85 billion more this year and next. That's not something most people include in their math. On the negative side, we're including what may be the first overall cost calculation of a special tax break that's worth tens of billions of dollars to four big bailout recipients. And, of course, we've analyzed reports from the Congressional Budget Office, the Treasury, the Federal Deposit Insurance Corp., and other sources.

We'll get to the detailed numbers in a bit. But for now, we'd like to remind you why the bailout exists. The revisionist idea that the bailout is the problem -- rather than excesses in the financial system -- is simply stunning to those of us who watched the financial crisis surface in 2007, when two Bear Stearns hedge funds speculating in mortgage securities collapsed, and reach a crescendo in September 2008, when Lehman Brothers went bankrupt. Many in the financial world applauded Washington's decision to let Lehman go under -- but that applause was quickly replaced by fear as unanticipated consequences of the bankruptcy surfaced.

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Interesting read
http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/

[RaleighNCDUer]

1. I, for one, never said the bailout didn't or wouldn't work -

I only objected to the banksters paying BONUSES with the bailout funds.

[bluestateguy]

2. The banks were expected to use that money to lend out

To lend it to borrowers. They did not do so. They either pocketed the money or used it to buy up smaller banks.

Furthermore, I do not feel the banks were sufficiently grateful to taxpayers for bailing them out. They could have at least sent out a thank you note.

[Dawson Leery]

3. The business rags are going to defend big business.

The TBTF banks needed to be cleansed out of the system.

[jwirr]

4. Of course it is working for the top percentage and the rich. It is not

working for the middle class and main street. Our social security, medicare, medicaid and everything they can get their hands on is being cut and worst of all people are not buying at WalMart anymore.

[indurancevile]

5. says fortune magazine. it worked for the finance sector. it didn't work for anyone else.