I think the misunderstanding is that Ally Financial is "part of the auto industry". Yes, really.
So here's where the numbers come from :
1) +15.3 billion : auto industry + financial industry
which is 0.06% per year, for 3.5% over 6 years
2) -9.2 billion : auto industry
3) +1.3 billion : Ally Financial
Therefore:
4) (inferred) -10.5 billion : auto industry - Ally Financial
5) (inferred) +24.5 billion : financial industry TARP
First caveat. Given the risk on the troubled assets, this is a pathetically bad return over 6 years. These were the worst of the worst, something everybody else would have demanded something like 13-14% interest per year for in 2008.
Second caveat, we all know why the finance industry came out ahead (not necessarily a good publication in this link, just the first reasonable link on Google for this subject) :
So really, the full story is, $426 billion TARP + $3 Trillion in loans to banks was sufficient to convince the banks to pay $450 billion to the US government. They have not, of course, paid back the 3 trillion, nor are they capable of doing so.
Third caveat, a lot of that $3 trillion has gone into stock buybacks, effectively giving the money to investors in S&P 500 companies (especially financials). The idea is that the S&P should continue to increase in value, despite the money flow having stopped (mostly). History teaches though, that when this happens, a more common result is a stock market crash. That doesn't happen until loans aren't free anymore though (currently the FED says rate hike will happen around June).
Frankly if you're in a startup, make sure to have a job at Google, Yahoo or Amazon or some large player by the time the rate hikes happen.
Meh, it's more complex than that since they didn't put in $426B on day one and then get out $450B on the last day, you'd have to weight each investment on its own time frame and run independent returns. Either way, the bailout wasn't set up to make a profit, so it's fairly pointless to judge the returns..
So here's where the numbers come from :
1) +15.3 billion : auto industry + financial industry
which is 0.06% per year, for 3.5% over 6 years
2) -9.2 billion : auto industry
3) +1.3 billion : Ally Financial
Therefore:
4) (inferred) -10.5 billion : auto industry - Ally Financial
5) (inferred) +24.5 billion : financial industry TARP
First caveat. Given the risk on the troubled assets, this is a pathetically bad return over 6 years. These were the worst of the worst, something everybody else would have demanded something like 13-14% interest per year for in 2008.
Second caveat, we all know why the finance industry came out ahead (not necessarily a good publication in this link, just the first reasonable link on Google for this subject) :
http://www.financialsense.com/contributors/greg-weldon/stock...
So really, the full story is, $426 billion TARP + $3 Trillion in loans to banks was sufficient to convince the banks to pay $450 billion to the US government. They have not, of course, paid back the 3 trillion, nor are they capable of doing so.
Third caveat, a lot of that $3 trillion has gone into stock buybacks, effectively giving the money to investors in S&P 500 companies (especially financials). The idea is that the S&P should continue to increase in value, despite the money flow having stopped (mostly). History teaches though, that when this happens, a more common result is a stock market crash. That doesn't happen until loans aren't free anymore though (currently the FED says rate hike will happen around June).
Frankly if you're in a startup, make sure to have a job at Google, Yahoo or Amazon or some large player by the time the rate hikes happen.