Bailout highly profitable for taxpayers, when you look at the right numbers

It’s always nice to start a year by using the right numbers, especially if they are upbeat ones. So let’s start 2015 with the good news that U.S. taxpayers are far more ahead on the financial bailout than almost anyone realizes.

Let me explain. In mid-December, when the Treasury unloaded its final shares of Ally Financial, its last major Troubled Asset Relief Program (TARP) holding, and declared the books more or less closed, it said that U.S. taxpayers had made $15.6 billion. That touched off a debate about what that $15.6 billion bailout profit meant.

But you know what? By my math, that $15.6 billion is only about 1/25 of the profit that taxpayers have realized on the bailout. That’s because TARP was only a minor part of the resources that the government committed to the bailout.

But the real guts of the bailout — backstopping the world financial system, driving down interest rates, preventing mortgage-finance giants Fannie Mae and Freddie Mac from defaulting on their massive debts — were administrative actions that didn’t need congressional approval. Thank God.

The actual taxpayer profit on the bailout is about $350 billion, by my math. That’s right, $350 billion. All in cash, most of which has held down the federal budget deficit over the past six years. That’s serious money, even by today’s standards.

Where is my $350 billion number from? I’m glad you asked.

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