So here are the eventual taxpayer losses we are looking at:
Fannie and Freddie — $165 billion and rising
FDIC — Over $100 billion
FHA — Who knows, even today they’re still encouraging new sub-prime loans.
AIG — $0
The big banks — negative $7 billion
Would it be fair to say that the initial reporting of the crash of 2008 was a bit misleading? The reporting that led most people to form indelible opinions that they will probably never re-visit or re-evaluate?
Some will argue that the Fed policy of buying MBSs indirectly helped the big banks. Maybe so, but if we are talking about indirect effects from government programs, then what about the indirect effects of the Fed letting NGDP fall 8% below trend in 2008-09? That hurt banks far more than any Fed MBS purchases helped them.
Originally from the pit at Tradesports(TM) (RIP 2008) ... on trading, risk, economics, politics, policy, sports, culture, entertainment, and whatever else might increase awareness, interest and liquidity of prediction markets
Thursday, September 16, 2010
Scott Sumner looks at the numbers: it wasn't the banks that were too big to fail
It was the government:
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