September « 2010 « Economics Info

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I’m more than a little confused on the U.S. economic situation at the moment regarding things like TARP and would really appreciate some clarity.

From what I know, the Federal Reserve has expanded its “books” by $2 trillion by buying toxic assets from the banks (CDOs, bad mortgages, etc). The banks then get money at the near-0% interest rate and buy bonds, paying 3% or whatever they are/were at. This would be “free money”, no … which seemed to give some great bonuses last year?

And in the end, isn’t the taxpayer on the hook for all of this? These assets the Fed took on the books are becoming more worthless by the day, so I don’t see them turning any sort of profit on this.

Hopefully I’m missing something.

submitted by EternalNY1
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Archive for September, 2010

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