[Toddsterpatriot]

The bailouts worked at covering over the losses of the banks

How do you figure that?

[1rudeboy]

Do you remember laughing about how TARP1, TARP2, and TARPx were going to be combined into a universal vortex of suck?

[conservativefreak]

When the US Treasury injected money into the banks (regardless of the health of the bank) via what was basically forced equity stakes using the Capital Purchase Program, it shielded Citibank from dealing with its skeletons in the closet. Citibank should have been liquidated, but wasn't. Furthermore Goldman Sachs shouldn't have been give 100% restitution for the insurance it bought from AIG.





The above image from the Congressional Oversight Panel's February 2009 report page 7. Notice in the above image the average subsidy in injecting capital to these banks was 22%. We know now that it was paid back with interest (except for Citi, which need more capital injections).

To complete the incestuous circle, banks made money by borrowing from the Federal Reserve at near zero interest rates and buying government bonds. Banks were the first ones to take advantage of the Federal Reserve's Zero interest-rate policy. I've wondered if TARP would've made money if interest-rates would reflect the inherent risk in the market at the time (2008-2010).