$21bn.
That’s the amount the Congressional Budget Office estimates the Federal Reserve’s credit programmes cost US taxpayers.
Of course, that’s not on a cash basis. The CBO has previously estimated that the Fed will be paying the Treasury around $70bn a year in 2010 and 2011 (compared to payments of between $18bn to $34bn from 2000 to 2008) because of the expected higher yields of the riskier-than-normal assets the US central bank bought to stabilise the economy during the crisis.
But, of course, there is risk. They might pay out less. They might not pay out at all. And, in many cases, the price the Fed paid for them wasn’t discounted for the associated risk. Now the CBO has estimated the amount the Fed overpaid – $21bn. Here’s there breakdown.
Of course, had the Fed not offered these “subsidies” there’s a chance the cost of the crisis would have been higher. The CBO does not estimate the economic benefits of the programmes in this analysis. And besides, these days, $21bn in bail-out subsidies – especially paper ones – is chump change compared to the overall cost of government interventions. Fannie and Freddie asked the US government for almost that much in fresh aid earlier this month.
Still, $21bn is $21bn. It’s nice to be able to put a specific price tag on what taxpayers gave the banks.
