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Bailout costs to go higher
Source: Agencies |
April 6, 2009, Monday
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Print Edition
Print Edition
BAILING out the financial sector will cost American taxpayers US$167 billion more than originally anticipated, according to a Congressional Budget Office estimate.
The original figure in January was US$189 billion, but it is now US$356 billion - US$152 billion more for this year and US$15 billion more next year, the CBO says in its March report updating the budget and economic outlook.
The CBO raised its projection because yields have increased on securities issued by the bailed-out financial institutions under the US$700-billion Troubled Asset Relief Program.
That means there will be an increase in the cost of the subsidy from the United States Treasury's purchase of preferred stock, asset guarantees and loans to auto makers, the CBO said.
Since the CBO issued its original cost estimate for the program, the Treasury announced additional deals with Bank of America and American International Group.
Those deals will be at rates higher than the averages in the CBO's original estimate. Also going up: the subsidy rates in the administration's US$50-billion program to deal with home foreclosures.
The TARP program isn't the only one that will prove more costly to taxpayers than originally thought, says the CBO.
Bailing out Fannie Mae and Freddie Mac - the two mortgage finance giants taken over by the government in September - will cost another US$52 billion this year alone, and an extra US$28 billion from next year to 2019, says the CBO.
Since January, the condition of Fannie Mac and Freddie Mac has become worse than expected.
The original figure in January was US$189 billion, but it is now US$356 billion - US$152 billion more for this year and US$15 billion more next year, the CBO says in its March report updating the budget and economic outlook.
The CBO raised its projection because yields have increased on securities issued by the bailed-out financial institutions under the US$700-billion Troubled Asset Relief Program.
That means there will be an increase in the cost of the subsidy from the United States Treasury's purchase of preferred stock, asset guarantees and loans to auto makers, the CBO said.
Since the CBO issued its original cost estimate for the program, the Treasury announced additional deals with Bank of America and American International Group.
Those deals will be at rates higher than the averages in the CBO's original estimate. Also going up: the subsidy rates in the administration's US$50-billion program to deal with home foreclosures.
The TARP program isn't the only one that will prove more costly to taxpayers than originally thought, says the CBO.
Bailing out Fannie Mae and Freddie Mac - the two mortgage finance giants taken over by the government in September - will cost another US$52 billion this year alone, and an extra US$28 billion from next year to 2019, says the CBO.
Since January, the condition of Fannie Mac and Freddie Mac has become worse than expected.
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