US Taxpayers Could Be On The Hook For $23.7 Trillion!

A US official says that the US government has placed as much as $23,000,000,000,000 (trillion) of taxpayers money in support of the US financial system.

This from Bloomberg (bold highlights mine), ``U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

``The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

``Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.

``“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”

``Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs."

Table From WSJ

WSJ's Matt Philips also rushes into the defense noting that, ``It’s important to keep in mind the $23.7 trillion doesn’t really represent “spending.”

``It takes into account run-of-the-mill TARP programs such as loans to industries — the $79.3 billion lent to troubled auto giants for example — as well as exposure in the form of backstops to loans, such as the projected $1 trillion worth of backing for loans available through the TALF program. Also, we should point out that the mega-figure referenced above also includes a projected $500 billion to $1 trillion for to help banks shed their balance sheets of those toxic — oh, right, sorry … legacy assets through the Public Private Investment Program, or PPIP."

``Beyond that, the $23.7 trillion figure also includes total forecast exposure of the Fed, the FDIC, the Treasury — outside the TARP program — as well as the cost of swallowing up Fannie Mae and Freddie Mac, not too mention the potential cost of the enlarged guarantees tied to agencies such as Ginnie Mae. (For the full rundown on everything thrown into the number check out this section of the watchdog agency’s quarterly report.)

``The thing is, not all of the funding tied to financial crisis programs is going to get used. For instance, The Journal had a story on how the Fed’s lending has ebbed since the worst of the financial crisis, which suggests that the Fed won’t have to use all the ammo it set aside to combat the financial collapse."

Defenders of the faith are looking at an optimistic outcome. We don't share the same enthusiasm.