A New Sign That The Government Bailout Isn't Working

Posted by: Emily Thornton on February 17, 2009

Here’s an interesting new way to measure how much the government’s bailout is, or perhaps in this case isn’t, working:

The Ethisphere Institute, a non-partisan research think tank, has just set up an index to track the US Federal Government’s returns on its more than 400 investments through its Troubled Asset Recovery Program (TARP). The institute plans to put out weekly reports detailing the performance of the TARP investments at http://ethisphere.com/ethisphere-tarp-index-report/.

Last week’s returns weren’t pretty. While the benchmark Standard & Poor’s 500 index sagged 5%, the Ethisphere TARP Index plunged 44%. In other words, the government lost $86.5 billion of its original $195.5 billion investment, according to the institute’s calculations.

If investments made in the heat of the moment during the credit crisis in Bank of America, Citigroup, JP Morgan and Wells Fargo are excluded, the index fell about 29%, or $27.6 billion.

Interestingly, that’s because those banks weren’t last week’s worst performers: That dubious honor goes to US Bancorp for losing $3.7 billion in value and Huntington Banchshares, which tumbled 81.5%. SunTrust Banks also lost $3.6 billion, or 74.8% of its value.

Who did well? The government’s investment in Morgan Stanley increased 26.3%, or by $2.6 billion, while Central Valley Comunnity Bancorp gained 45.9%.

Reader Comments

patrick

February 18, 2009 8:53 PM

while that is all well and good only an idiot or day trader measures gains and losses over a few weeks or months.

on the same note, i'm glad some one is tracking it. lets just wait a year or two before we declare it the failure that i'm sure we all know it will be.

Thomas Esmond Knox

February 20, 2009 9:47 PM

Good thing they didn't "save" Lehman Brothers.

The loss would have been much higher.

Sal Cecala

February 21, 2009 11:58 AM

I feel that the government bailout is seen as money to continue "business as usual" to stimulate the economy. It was these practices that put them in a pickle to begin with, and time after time I see blame put on folks taking these risky loans, and to a point I agree but my friend who was a broker said the mortgage companies were paying incentives to them when they could have also put them in a slightly higher rate fixed or flat out give them the reality check they cant afford a home. Hmm wonder what I would do as the broker? Take the higher commission and guarantee return business in 2/5 years when the adjustable kicks in? I believe that the bailout needs to be viewed in the proper light it is basically putting these companies on government welfare program. Ironically enough we are outraged at executives but at least they are contributing, rather than when I see folks in the grocery store using WIC and food stamps and also buying cigarettes and alcohol with cash, wearing expensive acrylic nails and designer clothes and rolling out their carts to a new $60K SUV... It is a blow to my intelligence that this is how my tax dollars are being spent when I cant afford that for my family and work my tail off to do it,. At least the executives are not hiding their stuff under their mom's name to skirt the system. But need to see now is a time for restraint... To sum up we need any program that uses tax $ to be monitored and in a time where unemployment is high create new jobs for analysts and case workers to follow where the money is actually going. A more suitable plan for the banks is a bailout fund that is doled out directly for home and business loans, rather than giving these execs a bundle to do what they please- to ensure putting the money to its intended use. Let them use their own money for spa days and jets- they have the means to afford it, and this way they contribute to fueling the economy, but using their dime not enjoying themselves on mine!

Nick

February 23, 2009 12:10 PM

No one 'likes' the bailout, but it is a necessity: Without it, the economy would crash harder and lead to even higher losses.

Dee

February 24, 2009 2:00 AM

Ya know, it really eats at me. For some unknown reason, ..and I have been listening to the news very carefully concerning this BAILOUT, and that is, WHY ARE WE SAVING THEIR BUTTS?? What's wrong with this picture??? they actually stole from us, and we are giving them the money to continue robbing us????? Oh, so we have to ignore this or the economy would crash harder??? GIVE ME A BREAK!!! its going to go on, and on and on and on and on......until there is an civil war!! its simply and clearly ROBBING THE POOR CITIZENS OF THIS COUNTRY AND TAKING EVERY FREEDOM AWAY THAT THEY CAN THINK OF!! PEOPLE AREN'T GOING TO CONTINUE TO STAND FOR THIS. PEOPLE ARE LOSING THEIR RETIREMENTS THAT THEY'VE WORKED THEIR ENTIRE LIFE FOR!! AND NO ONE CARES???????????????? HI HITLER!!!!!! GET READY TO SAY IT SOON......I WON'T ......NOOOOOOO WAYYYYYYYYY!!

Dee

February 24, 2009 2:05 AM

Nick ...sorry, but I totally disagree.

This bailout isn't going to create ONE JOB!!! Businesses creates jobs! The businesses are being TAXED TO DEATH....who wants to start a business knowing that? Where are people going to get even small jobs? The businesses that were in place are closing down all over this country.

Oh, this is temporary? FOR HOW LONG? WHAT ARE PEOPLE GOING TO DO IN THE MEAN TIME? PEOPLE WHO NEVER WERE ON WELFARE ARE GOING ON WELFARE. ITS NEVER GOING TO END. THIS IS WHAT OBAMA WANTED!! BUT, ITS ALL BUSH'S FAULT..

Karl

May 7, 2010 11:28 PM

I wonder if Akio Toyoda knows Warren Butthead? Anyone can 'Google' this- WARREN BUTTHEAD POEM, and read it on the web. Thank You

Bob Smith

June 7, 2010 1:17 AM

Finally a balanced approach to the Toyota quality issue. Sure they did not get out in front of the issue fast enough and sure they got big real fast causing their traditional design practices to possibly not be enough to develop high same quality parts at multiple suppliers world wide. There was obviously a communication issue between the design lead supplier in Japan and the USA source.

However, if the changes really take hold at Toyota, their position as a global leader will be ensured for many years to come. If the changes fail, Japan inc is in trouble.

The real issue is the total irresponsible coverage in the USA media fanning the flames around the demonization of Toyota. The USA government law makers hunger for the spot light on this issue also makes great dinner time theater and is a further setback for the USA and its global image.

The real losers here are the people allegedly harmed by the defective vehicles and their class action lawsuit. The legal circus will ensure the lawyers get rich and their clients get a few peanuts. A further setback for the USA world wide standing.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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