The other week, Matt Yglesias called me out after I praised the reporting of the two recent magazine pieces on Treasury Secretary Tim Geithner. Matt thought I was talking about interviews with Geithner, but I was not: I was referring to the analysis of Treasury's underrated policies. Another example comes in Daniel Gross' column this week, where he looks at the fate of our AIG subsidies and determines that the cost to taxpayers will likely be much, much smaller than anticipated:
It may not come as much relief to taxpayers, but the various efforts to prop up AIG are also working out much better than expected. The Fed and Treasury are still into AIG for a combined $127 billion. But—surprise!—a lot of it is coming back. And there's a not-too-farfetched scenario in which we come close to breaking even on our reluctant investment in the company. ... Some rough math suggests the final cost to taxpayers for the AIG debacle could be between $12 billion and $20 billion. Yes, that's a bitter pill to swallow. But it's a much smaller pill than we had imagined even a few months ago.
That's why it's always irritating when people wildly exaggerate the amount of money that taxpayers "lost" because of the bailouts, or try to make the case that less money has been spent on helping the regular economy than the financial sector. Obviously the moral case against the bank bailouts is clear and true, but substantively the economic losses to society without a bank rescue would have been worse. Hence the need for financial reform to make sure we don't need to bail out these institutions again, which is today's program activity.
-- Tim Fernholz
