For Banks, $80B Gift was Massive Overpayment

by Benjamin Domenech on 10:01 am February 6, 2009

In efforts to stabilize troubled banks, the Treasury Department overpaid those institutions by nearly $80 billion, the head of a bailout oversight panel told lawmakers Thursday. Elizabeth Warren, who chairs the congressional panel overseeing the Troubled Asset Relief Program, said Treasury officials chose not to risk-adjust the government’s investments in troubled banks, instead paying “a uniform price” regardless of each bank’s health. As a result, she estimates, taxpayers have spent $254 billion on capital investments worth just $176 billion — a difference of roughly $78 billion.

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