A recent report by the Treasury Department showed the government expecting to regain most of the $370 billion it lent to failing banks since the finical decline, losing only $42 billion. This is supposed to be good news since the initial reports stated the government could lose $100 billion when it started the bailout program.
So all appears well right?
The fact that we are losing $42 billion instead of $100 billion is good news – for about 30 seconds – then I took a moment to think.
The reason why banks are able to pay back what they owe is because they are transferring the cost to their customers. So instead of having taxpayer money support the banks, they did things like raise credit card interest rates, loan interest rates, various fees etc…
Smart move by the banks don’t you think?
They get control of their business back from the government and stock holders are happy. In addition, we as customers are ok with it because they paid back their loan. That is an important fact, paying back the loan, I do not dispute that. Just realize how they have been able to pay back those funds; by making their customers – you and I – pay for it. That is why I am not smiling about the news, because I know I pay more because of it.