$254.8 Billion

That’s how much of the $700 billion in Trouble Assets Relief Program (TARP) money – the fund set up to bail out our financial system – is yet uncommitted. That does tell you than we’ve spent $445.2 billion, and according to CNN Money (October 3rd), here’s how we’ve fared:


· We’ve probably lost $100 billion. Bye-bye? But many think we avoided the Second Great Depression. Maybe? Maybe not?

· The government bought into preferred shares or convertible debt (about half of the total they have spent to date) of the big financial insitutions, and has received repayments of $71 billion and preferred stock (pretty safe) of $12 billion.

· The mortgage foreclosure relief program has spent about $22.3 billion (out of $50 billion allocated), and most of this is a total loss.

· GM and Chrysler sucked up about $83.5 billion, $2.1 billion of which has been repaid, $50 billion is sunk (and that might be right word) into GM and $15.2 into Chrysler… Treasury thinks that almost $30 billion of that will be lost or at least underperform. Are these bad boys heading south anyway as consumers just are not spending to buy big ticket cars, except with extraordinary incentive plans (cash for clunkers)? Is bankruptcy (and a big taxpayer hit) inevitable?

· Treasury has pumped about $44 billion into troubled insurance giant, AIG, and there is still TARP money available for that company. “[E]conomists are dubious about getting the whole thing back. The company has pledged to repay its TARP loan in three to five years, but the insurer has missed three dividend payments already and won't pay back most of its other loans.” Hey, those economists!

· “Treasury converted its entire $20 billion emergency loan to Citigroup … into common stock. Financial industry experts note that though Citi's stock is up 365% from its March low, Treasury didn't convert the stock into common shares until the end of July, missing the vast majority of that rally.”

· “Economists are also doubtful that companies like GMAC [$13.5 billion], Bank of America [$45 billion] … and CIT [$2.3 billion and close to bankruptcy] … will pay back all or any of their loans.”

We’ve rescued the 19 biggest financial institutions and left the regional banks to wallow in hard times and severe credit impairment. And for the most part, the biggest banks seem to be in reasonable shape. Our carmakers are facing a consumer base with little desire to make big ticket expenditures, and their future, notwithstanding the bailout, is anything but certain.

Has the hurricane passed? Why do I think we are at the eye of the storm? The weather report is not exactly what most of us want to see. Happy Belated Birthday, TARP (October 3^rd)!

I’m Peter Dekom, and I approve this message.