Where Your Tax Dollars Are Really Going

You can call it a deal, a settlement, a bailout...

I'm talking about the foreclosure settlement announced between the states and Wall Street.

Whatever you want to call it, make sure you include "mess".

Federal and state officials along with five of the largest mortgage lenders in the country agreed to a $26 billion deal.

This was in response to the robo-signing scandal and the faulty paperwork affecting millions of homeowners across the country.

The majority of that money will be used to refinance home loans and even to write down loan principals. Controversial enough since the damage to these homeowners in most cases is that they got to stay in their homes without paying their mortgage while the terms of this deal were hammered out.

But tonight, we'll focus on the $2.5 billion in the settlement heading to the states.

According to reports, Attorneys General may use the money for foreclosure relief, counseling, legal assistance, mediation initiatives and other housing programs. Pretty specific anyway.

But as is often the case with these things, the money is not always going where it's supposed to... Not always going to homeowners.

Here are two examples:

Let's start with Missouri; a recipient of more than $41 million from the settlement.

Only about a million dollars is being used as it was intended.

The governor instead is sending the remaining $40 million to the state's public colleges and universities.

He recently cut funding for these institutions by 40%.

And then there's Wisconsin, which is getting more than $31.5 million.

Only $6 million is going to housing programs.

Instead, the $25.5 million remaining will be used to pay off the state's $143 billion budget gap.

If you don't follow up, If there's no oversight, Money is going to be misspent.

It's the nature of the beast.

Nothing is a better example of this than what came to be three years ago today.

On this day in 2009, President Obama signed into law his massive $825 billion stimulus law that was supposed to save our economy, and bring unemployment back below 8%.

Clearly that never happened. But the other problem was with the money that was handed out. No one really paid attention to where it was going.

According to a report from the Senate a year after the bill, a half million dollars was given to a visitors center in Washington State to fix the windows, but the building had been closed since 2007.

Nearly $7 million went for repairs to a 19th century fort on an island off the coast of Florida that no one can actually get to, and $89,000 to replace relatively new sidewalks in Oklahoma that are no where near any houses or businesses. In fact, one leads to a ditch.

These are all examples of mishandling by our government.

There's no accountability... No responsibility....

If politicians get their hands on money, they will do with it what they want. A lesson learned far too often.

Gone, but Not Forgotten

$133 billion.

That’s how much taxpayers are still owed from the bailouts three and a half years after the money started pouring out of Washington.

That’s according to Christy Romero, the acting Special Inspector General for TARP.

Back in September of 2008, at the height of the financial crisis, Congress authorized $700 billion for the bailout of financial companies.

The good news: less than $414 billion was paid out.

The bad news: the government has only recovered $318 billion.

And it gets worse. Some bailout programs, such as efforts to help homeowners avoid foreclosure, will last another five years costing an additional $51 billion!

Now, when you hear the word TARP, Troubled Asset Relief Program, most people think of bank bailouts, and keeping those "too-big-to-fail" institutions afloat.

That was a big part of it, but that's not what's keeping us down.

According to Romero, the initial bank bailout program "morphed" into 13 other bailout programs including a massive bailout of the auto industry.

While there are hundreds of companies and organizations yet to pay back the taxpayer, GM, AIG and Ally financial have the biggest chunk of your money.

And don't expect to see it anytime soon.

Here’s why:

Let’s start with GM: they got $49.5 billion in TARP money. As a result, we the people own about a third of the company or roughly 500 million shares.

Just to break even, forget about making a profit, just to break even the treasury would need to sell those shares at $52.39 a share - factoring in dividends and interest.

GM’s stock today is less than half that amount!

And it's been hugely volatile over the last year. In December, the stock hit a new low of $19.

Then there's good ole AIG. The insurer got about $68 billion from TARP, but according to reports, the company was actually given about $182 billion in total from both the Treasury and the Federal Reserve.

That comes out to us owning three-quarters of this company.

We’ll break even if the government can sell it's 1.5 billion shares at $28.73 a share.

But AIG has been trading well below that level for a while now.

Plus, because of the enormous amount of shares we own, flooding the market will likely drive the price even lower.

In other words, don't hold your breath.

Finally, Ally financial: once the GM financial arm called GMAC.

TARP invested more than $17 billion in this bank - again a 74% stake.

As for selling that stake, that's going to prove difficult since Ally is not publicly traded!!

This doesn't even include Chrysler or Fannie and Freddie.

Bottom line - Bank of America and the other big banks may have paid back the bailout with interest, but TARP is far from being over.

And with this President's love of big government, I expect the problem to just grow over the next few years.

It's time Washington let the free market work, and stop playing fast and loose with my money since we obviously don't have a good plan on how to get it back!

Taxpayers Still Footing TARP Bailout Bill

Taxpayers are getting some payback on their bailout of one of the world's biggest insurance companies: AIG.

It's a drop in the bucket compared to all the money that was sent out the door through the Troubled Asset Relief Program (TARP), but still, American International Group is repaying $972 million to the U.S. treasury this week.

That brings AIG's outstanding balance from the 2008 bailout down to roughly $68 billion. That's out of the $182 billion ploughed into the company at the height of the financial crisis.

The government still owns 77 percent of AIG's common stock - and don't expect it to sell any time soon. Because AIG stock has lost nearly half of its value this year - the expectation is those stock sales will not resume until shares go back up again.

So you're still out $68 billion bucks from AIG. Unfortunately the insurance giant is one of many that still owe Uncle Sam from their bailout deals.

According to the watchdog website Propublica - of the more than $580 billion spent so far, less than $278 billion has been paid back.

The biggest culprits are of course Fannie Mae and Freddie Mac. The mortgage twins have pocketed nearly $170 billion since 2008. The government has only recovered $28 billion.

The automakers also got huge handouts - with the exception of Ford. GM, which ended up in bankruptcy despite it's $80 billion bailout, has paid back about a half of its money.

The government wrote off over a billion dollars in the Chrysler bailout. And while the big banks have paid back on TARP - some smaller financial companies are still in the red.

Ally Financial - an arm of General Motors - has returned about a quarter of its $16 billion dollar handout. And Regions - has barely put a dent in the money it was given!

It's been nearly three years and companies are still not fulfilling their end of the bailout bargain and the taxpayers are the ones paying the price! As usual!

As is the case with the bungled stimulus money, more strings needed to be attached to such gifts - and much more follow-up conducted.

This isn't Monopoly money the White House and Congress can spend at will. They're playing with our hard-earned money. I watch where I invest, and so should they!