US Government Confronting Debt Payments | CF
Clipped Fresh — By Greg on November 23, 2009 at 8:42 am
Payback Time – Wave of Debt Payments Facing U.S. Government – Series – NYTimes.com.
FROM THE ARTICLE: The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.
But that happy situation, aided by ultralow interest rates, may not last much longer.
Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
COMMENT: For those quick to point a finger at the roughly $1.4 trillion added to the national debt since President Obama took office, keep in mind that the debt increased by 72 percent during the Bush Administration. President Obama inherited two wars and an economic nightmare. President Bush inherited peace time and a string of budget surpluses.
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“Société Générale,” he says, “got $9.6 billion in collateral payments from the money we had loaned earlier to AIG. Plus, we paid Société Générale another $6.9 billion through a special purpose vehicle we created, called Maiden Lane III. In total, the French bank walked off with $16.5 billion.
“Goldman Sachs,” continues Geithner, “got $8.4 billion in collateral payments, plus another $5.6 billion from Maiden Lane, adding up to $14 billion. “Deutsche Bank got a total of $8.5 billion … Merrill Lynch — $6.2 billion … UBS — $3.8 billion … plus …”
“Please cut to the chase,” says the president impatiently. “How much overall?”
“They got $62.1 billion, plus another $2.5 billion we agreed to pay to compensate them for shortfalls in their collateral. Grand total — $64.6 billion.”
“Wait a minute!” interjects the president. “A lot of these big banks, notably Goldman Sachs, have forever insisted that they never wanted a bailout, never needed one, and never got one.”
Geithner picks up the report and waves it for emphasis. “And SIGTARP has forever disagreed.”
“What’s their conclusion?”
“In effect, SIGTARP concluded that, via this back door, the 16 banks not only got big bailouts … they never had to pay back a dime of the money.”
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