Potential Cost of US Financial Bailout: Over $8 Trillion

Two new Federal Reserve programs aimed at easing consumer credit and lowering mortgage costs have pushed the potential bill for US financial rescue efforts to about $8.317 trillion, although far less has been committed so far and money extended might not be lost.

CNBC.com

Following is a rundown of the total amount of known US public funds that could be put at risk—either spent, allocated or pledged—in Fed liquidity, loan and purchase actions, Treasury Department financial rescue efforts, housing support legislation and actions by other federal agencies:

• Up to about $1.8 trillion in Fed purchases of top-rated US dollar commercial paper under a facility launched in October. The Fed said it does not intend to buy anywhere near this amount, which represents what eligible issuers could sell—up to $1 billion per issuer. As of Nov. 19, the Fed's holdings in this facility were $270.88 billion.
• Up to about $1.9 trillion in new Federal Deposit Insurance Corp guarantees for banks, including $1.4 trillion in new senior unsecured debt issued by banks, and $500 billion in transaction deposit accounts typically used by businesses to pay employees and vendors.
• Up to $800 billion in Fed support for mortgage and consumer credit markets, including purchases of up to $600 billion in debt and mortgage-backed securities issued by government-sponsored enterprises. The Fed is also launching, with Treasury backing, a $200 billion loan facility to support consumer credit, such as student auto and credit card loans.
• Up to $600 billion in Fed purchases of US dollar commercial paper and certificates of deposit under a Money Market Investor Funding Facility announced Oct. 21.
• Up to $900 billion in Fed Term Auction Facility loans was offered to meet financial institutions' cash needs over the year-end period, including $600 billion in normal auction facilities and two $150 billion "forward" TAF auctions conducted this month. As of Nov. 19, $415.3 billion in TAF credit was extended.

• Unlimited commitments to lend through discount window to banks and broker dealers. Credit extended under these facilities totaled $296.82 billion as of Nov. 19.
• $700 billion for the Treasury to buy equity stakes in financial institutions. The Treasury allocated $250 billion of this amount to banks and thrifts and granted another $40 billion to insurer American International Group and $20 billion to Citigroup under special rescue programs. The ultimate cost of these programs is uncertain and the government could profit if the shares rise in value.
• The Treasury, the FDIC and the Fed have agreed to shoulder up to $249.3 billion in losses from a Citigroup portfolio of $306 billion in risky assets.
• Unlimited temporary Fed currency swap lines with the European Central Bank, and central banks in England, Japan and Switzerland. The Fed maintains $165 billion in swap lines with other central banks to address elevated pressures in US dollar short-term funding markets.
• Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.
• At least $26.57 billion in Treasury direct purchases of mortgage-backed securities since September. The Treasury has said it will continue to make purchases in the months ahead.
• $200 billion to backstop Fannie Mae and Freddie Mac . The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed.

• Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac since their portfolio limits were expanded when the government took them over in September.
• AIG will get up to $152.5 billion in support from Treasury equity purchases and loans from the Fed.
• $300 billion for the Federal Housing Administration to refinance failing mortgages into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.
• $4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
• $29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.

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