The Bailout You’ve Never Heard Of

By Alex Pepper

Jul 21, 2010 10:45am

ABC News’ Matthew Jaffe reports: Everyone knows about the government’s controversial $700 billion Wall Street bailout in the fall of 2008, but not many people realize that the government has also spent that same amount in the last year alone… In a new report to Congress released today, Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), says, “The current outstanding balance of overall federal support for the nation’s financial system…has actually increased more than 23% over the past year, from approximately $3.0 trillion to $3.7 trillion – the equivalent of a fully deployed TARP program, largely without Congressional action – even as the banking crisis has, by most measures, abated from its most acute phases.” The new $700 billion in government support over the past year, Barofsky says, can “largely be attributed to greater support for” government-backed mortgage giants Fannie Mae and Freddie Mac, the housing market, and the financial firms that participate in it. In addition, Barofsky says that the federal government’s “maximum potential commitment” related to the financial crisis is $23.9 trillion. Barofsky made a similar estimate last year, but put the number of pledged support slightly lower, at $23.7 trillion. “This number should not be considered as an estimate of total potential losses,” he notes, “but rather as the sum of all of the maximum pledged explicit and illicit commitments to support financial institutions and the broader financial markets since the inception of the crisis.” Darrell Issa, the ranking Republican on the House Oversight & Government Reform Committee, blasted the Obama administration for all the ballooning federal support for the financial system. “The fact that the Obama Administration is treating TARP like its own personal slush-fund is beyond egregious and a complete betrayal of what the American people were told would be then when their tax-dollars were used to bailout Wall Street,” Issa said. “How many more reports will it take for Washington to wake-up to the reality that dumping more good money after bad only prolongs and deepens the economic crisis that is costing millions of Americans their jobs and their homes?” Barofsky is testifying on his new report at a Congressional hearing this morning. -Matthew Jaffe

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