The cost of the government bailout has ballooned to a value 7 times the GDP of Tanzania.
The Associated Press reports that the Congressional Budget Office has increased the bailout fund by $167 billion, bringing the total to $356 billion. Among the increases include purchases in preferred stock, asset guarantees and loans to automakers and subsidy rates in home foreclosures. The report states, “Bailing out Fannie Mae and Freddie Mac — the two mortgage-finance companies taken over by the government in September — will cost an additional $52 billion this year alone, and an additional $28 billion for their activities from 2010 to 2019, says the CBO.” CNNMoney.com adds, “The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO’s March projection of a $1.8 trillion deficit for fiscal 2009, which ends Sept. 30. The TARP cost projection was raised due to changes in financial market conditions, new transactions and a shift in expected timing of payments.”
It’s a pity how initial estimates ballooned to such a massive amount. Taxpayers are at the losing end. Back in October, former Treasury Secretary Henry Paulson assured that taxpayers need not fear the $125 billion injection of funds in nine banks. But now, American’s should be concerned with the direction of their money with reports circulating that Fannie Mae and Freddie Mac are planning a $210 million-bonus to its 7,600 employees. This follows after nine officials of American International Group have returned their bonuses when they came under fire after the much hyped retention payment scheme.
As the government hikes their expenses, maybe they should these with equal probing on recipient companies.