• Neil Barofsky Puts a Competely Plausible $23.7 Trillion Price Tag on the Bailout

    neil-barofskyThe concerned-looking fellow over there is Neil Barofksy, who holds the thankless post of TARP Inspector General, which means he lives in fear of Timothy Geither, who will probably have him waterboarded for saying things like "Yeah, nobody at Treasury even knows where the banks put all that money we gave them."

    Because Neil Barofsky's life is so stressful we can forgive him for wanting everyone else in the country to get a taste of the terror he feels, which is why Neil Barofsky just slammed us with the scariest thing he could think of: $23.7 trillion, as in the "total potential" cost of bailing out the financial system.

    $23.7 trillion! $23.7 trillion! $23.7 trillion! Aaahhhh! Type it five times and Ben Bernanke appears!

    [Barofksy's terrifying number] includes estimates of the maximum cost of programs that have already been canceled or that never got under way.

    It also assumes that every home mortgage backed by Fannie Mae or Freddie Mac goes into default, and all the homes turn out to be worthless. It assumes that every bank in America fails, with not a single asset worth even a penny. And it assumes that all of the assets held by money market mutual funds, including Treasury bills, turn out to be worthless.

    It would also require the Treasury itself to default on securities purchased by the Federal Reserve System.

    Oh no! Those are all things that could totally, realistically happen!

    The sheer unreality of the number did not stop some members of Congress from taking the estimate seriously.

    Phew.

    I'm going to sleep so much better tonight, now that I know our elected officials are keeping us safe from imaginary numbers.


    Tags: Banks, Economy, Neil Barofsky, TARP

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