By: Matthew Arndt, CFA, CPA, CFP | December 7, 2009 | The Politicians, The Regulators

Either some journalists are really naïve or they are complicit in trying to pull the wool over taxpayers’ eyes. Today’s headline, US Cuts Estimate of Bank Bailout Costs and the statement, “The Obama administration had estimated the cost to taxpayers of the $700-billion Troubled Asset relief Program, or TARP, would be $341 billion but now says it can cut that by $200 billion” (as if TARP were the only cost to taxpayers), only misleads readers to think that once the TARP is paid back, the banks have settled their debt and can carry on with business as usual. The cost of rescuing financial institutions is much higher than $700 billion.

Consider all the Government programs that have been created to help ailing U.S banks and the dollars that have been promised for which taxpayers are on the hook for. Here are some of the programs and the amounts that have been committed: GSE mortgage-backed securities purchases,$1.25 trillion (that’s $1,250 billion); Commercial Paper Funding Facility, $1.8 trillion; Citigroup loan-loss backstop, $220.4 billion; GSE debt purchases, $200 billion; Term Asset-backed securities Loan Facility (TALF), $1 trillion; Term Auction Facility, $500 billion; U.S. government bond purchases by the Fed, $300 billion(all figures came from CNNMoney.com’s bailout tracker). All these initiatives total well into the trillions of dollars.

These are not all the programs, but you get the idea. Taxpayers have spent trillions of dollars to help mismanaged financial companies. Government funds should only be available to protect the interest of insured depositors. It is not our duty to enrich incompetent banking executives. Corporate welfare rewards the reckless and penalizes the responsible people. Watch over the next several weeks how your tax dollars will be allocated to Wall Street bonuses; see how executives at these institutions that benefited from government aid pay themselves record bonuses in the next few weeks.

We need drastic change and we need it now! We have a short window of time to get this right. This change may need to come from outside the two parties currently entrenched in Washington. The future Capitalism depends on it.

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