Research

Yesterday, we highlighted Sen. Max Baucus’ comment that the so-called “Bank Tax” is all but inevitable. However, the facts keep getting in the way of the Democrats’ claim that the tax is necessary to recoup losses from TARP. Today, we’re reminded that the Treasury is making a record profit from the money that it lent to Wall Street:

"Two-thirds of the TARP investment from banks has already been repaid with a large profit to the taxpayer," said Steve Bartlett, president of the Financial Services Roundtable. "TARP was a positive boost to the economy and the government, and taxpayers are seeing a positive return on their investment." The Federal Reserve reported last week that it had transferred a record $47.4 billion in profits to the Treasury in 2009 from its Wall Street rescue operations — up 50 percent from 2008.

So, where are these losses from the TARP program coming from? Despite GM’s profoundly misleading commercials touting that they have repaid their government loan, they along with Chrysler account for the majority of the TARP program’s losses:

GM last week made an early repayment of $6.7 billion in loans it got from the Treasury, but it is not clear whether or when the Treasury will recoup the rest of its $50 billion investment in GM, which is held in the form of common and preferred stock. The nearly $20 billion invested in Chrysler, which has seen its sales plummet in the past year despite the bailout, may never be recouped.

And who ultimately pays for this so-called “bank tax”? CBO points out will ultimately be paid by Americans and small businesses that are already struggling to get by.