While their exact identities have not been made public, most are likely to have been large institutional investors such as banks, pension and mutual funds, insurance companies, and sovereigns. Congressional Budget Office, which use that method, and she augments those numbers with calculations based on various data sources from that period.īy those calculations, the total direct cost of crisis-related bailouts on a fair value basis was about $498 billion, which amounted to 3.5 percent of gross domestic product in 2009.Īs for who directly benefitted, Lucas found that the main winners were the large, unsecured creditors of large financial institutions. Lucas draws selectively from existing costs estimates, such as those from the U.S. Lucas pegs the cost of the 2008-09 bailouts at $498 billion.Īccording to Lucas, an accurate measure of cost requires taking a fair value approach - one that considers the full range of future gains and losses, and that recognizes the cost of that risk. Popular accounts of bailout costs tend to severely overstate or understate their economically relevant value, Lucas writes in a paper to be published in the Annual Review of Financial Economics. Lucas, MIT Sloan distinguished professor of finance and director of the MIT Golub Center for Finance and Policy. None of those numbers are accurate, according to Deborah J. had by then paid out $4.6 trillion of $16.8 trillion in committed funds. In contrast, a 2015 Forbes article claimed the U.S. In 2012, then-President Barack Obama claimed the government got back “every dime used to rescue the banks.” Meanwhile, ProPublica’s ongoing “ Bailout Tracker” reported a total net government profit of $96.6 billion as of February 2019, a figure that includes money paid back by bailed-out companies as well as revenue from dividends, loan interest, warrants, and other proceeds. Still others say that the government shouldn’t have used taxpayers’ money to save wealthy bankers.Įach of those groups can find numbers to support their conflicting views of the bailouts’ price tag. Others maintain the government should have taken even more aggressive actions - to save Lehman Brothers, for instance, or rescue homeowners with underwater mortgages. Policymakers from that time argue that bailing out critical financial institutions was necessary to stave off an even greater meltdown.
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