The U.S. is still deep in debt, but at least the cost of bailing out the nation’s financial system isn’t as bad as expected:New York Times: The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.
The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. That figure anticipated more financial troubles requiring intervention.
That means the deficit forecast for this fiscal year goes down $200 billion to $1.3 trillion.
But don’t pop the champagne yet — the government could ultimately lose $100 billion more from the bailout program in new loans to banks, aid to troubled homeowners and credit to small businesses.
Still, as the Times notes, the new estimate could help with public anger over the bailouts, and give a political boost to use TARP money for economic stimulus and job creation.