Taxpayer Handouts and Ripoffs

Obama Wants U.S. to Loan $100 Billion to Global Bailout Fund

May 20, 2009

CNSNews - President Obama has asked Congress to authorize $100 billion in loans to the International Monetary Fund (IMF) to help create a $500 billion global bailout fund...

Insurers Get Preliminary OK for Treasury Funds

May 14, 2009

AP - The Treasury Department has agreed to extend billions in bailout funds to six major life insurers, following a months-long quest by some in the sector for government help in shoring up capital positions in the wake of major investment losses.

The Hartford Financial Services Group Inc. was the first to disclose Thursday that it had been notified by the Treasury Department that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP. Lincoln National Corp., which commonly goes by the name Lincoln Financial Group, said it has been initially approved for a $2.5 billion injection from TARP's Capital Purchase Program.

Allstate Corp., Ameriprise Financial Inc., Principal Financial Group Inc. and Prudential Financial Inc. also are among insurers receiving preliminary investment approval, Treasury spokesman Andrew Williams confirmed. He declined to disclose the amount of investment each company will receive.

The total capital injection into the six companies will be less than $22 billion, The Wall Street Journal reported, citing a person familiar with the situation.

The $700 billion TARP bailout fund, approved by Congress last year, was originally intended to purchase toxic loans on the books of banks that were inhibiting their ability to make loans. But the fund quickly morphed into a capital backstop fund for banks that also was used by the Treasury Department to make loans to General Motors Corp., Chrysler and insurance giant American International Group Inc.

Life insurers also requested government aid, worried that their balance sheets had became clogged by illiquid assets and escalating liabilities to policy holders who bought in to this decade's explosion in the variable annuities market. But a final word from the government was slow in arriving, and the stocks of most public insurance companies plunged in recent months.

Life insurers own 18 percent of all corporate bonds, so aiding them is consistent with the bailout program's goal of unclogging credit markets. Insurers also have seen their investment portfolios slammed by declines in stocks, real estate and other financial assets in the last two years. Analysts have warned that some insurers risked falling below necessary capital levels, which is essential to avoiding costly downgrades from ratings agencies.

Insurance companies won backing from the Bush administration last year to be considered for the government's TARP program because some of the companies either owned savings and loans or acquired them to be considered for the bailout program, or were already classified as bank holding companies. The Hartford and Lincoln National, two of the nation's largest life insurers, and several others applied to become thrift holding companies last fall...

Geithner Says Small Banks Can Apply for Bailout Money

May 11, 2009

Triangle Business Journal - U.S. Treasury Secretary Timothy Geithner said funds from the Troubled Asset Relief Program will now be available to small and privately owned banks, according to numerous media reports Wednesday...

Bank of America Needs $34 Billion, Citi May Need $5-$10 Billion in 'New Capital'

May 6, 2009

Reuters - Bank of America, the largest U.S. bank, needs $34 billion in extra cash, a source familiar with U.S. government stress tests on leading banks told Reuters, unsettling markets and stoking talk of a possible asset sale in China. Separately on Wednesday the New York Times said Citigroup Inc may have to raise between $5 illion and $10 billion in the wake of the U.S. stress tests, a series of health checks which has been keeping a firm grip on financial markets this week.

Citigroup, whose shares were down 2.7 percent in U.S. pre-market trading, estimated that U.S. banks subject to stress testing by regulators would need $75 billion in total, of which BofA would eat up $33 billion. BofA shares fell 8.7 percent.

The news spooked investors, who had hoped the stress tests on 19 big banks would show the industry was in less dire condition than feared...

Obama Gives Chrysler $8 Billion to File Bankruptcy

April 30, 2009

AP - General Motors Corp. could get as much as $5 billion more in federal loans, while Chrysler LLC could get $500 million as they race against government-imposed deadlines to restructure, according to a government report filed Tuesday...

Chrysler will file for Chapter 11 bankruptcy protection in New York, giving Chrysler time to galvanize a partnership with the Italian car maker Fiat Group SpA. The government, which has poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government also will help appoint a new board of directors...