WASHINGTON — The government's controversial financial bailouts of automakers, major banks and other industries could cost taxpayers $87 billion when all is said and done, Treasury Secretary Timothy Geithner said Friday.
That's far less than expected; the price tag for the original bank-bailout legislation alone was $700 billion. However, many banks have since repaid their loans, with interest. The new bailout cost projections, if they bear out, could mitigate the public anger toward Washington that the bailouts generated.
"The cost of stabilizing the financial system is likely to be significantly lower than previously expected," Geithner said in a letter Friday to congressional leaders.
The biggest change in Geithner's estimates involved the Troubled Asset Relief Program, which was set up in 2008 to help rescue the collapsing American banking industry, and later expanded to help the auto industry and troubled insurance giant American International Group.
"Lower utilization, faster repayment and improved financial conditions have already reduced the program's impact on deficits and debt," Geithner said.
TARP losses should total about $117 billion, Geithner said in his nine-page letter.
That includes $48 billion that went to AIG; $28 billion to General Motors, Chrysler and their financing companies; and $49 billion to help homeowners facing foreclosure. Offsetting those losses somewhat are projected net gains of $9 billion from several Treasury TARP programs aimed at helping banks recover.
Separately, help for mortgage finance titans Freddie Mac and Fannie Mae, now in government conservatorship, should account for $85 billion in other losses.
However, earnings on the Federal Reserve's finance programs not only saved many banks from going under, but they're also now projected to earn $115 billion more than they cost.