Companies that received financial bailouts in the wake of the 2008 financial crisis and recession still owe taxpayers $124 billion, according to data compiled by ProPublica.
As the stock market tumbled in 2008 and people began to foreclose on their homes, lawmakers scrambled to pass an aid package aimed at halting the financial meltdown. The result was a highly controversial $700 billion bailout for financial institutions and automakers, and a separate bailout for the federally-backed loan guarantee companies Fannie Mae and Freddie Mac.
“We got back every dime we used to rescue the financial system, but we also passed a historic law to end taxpayer-funded Wall Street bailouts for good,” President Barack Obama told an audience in Miami last year.
The bailout allowed the U.S. Treasury Department to clear the balance sheets of financial institutions that had made bad bets on risky mortgage-backed securities.
“By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country,” said then President George W. Bush upon signing the bill.
However, the bailout was highly criticized at the time as corporate welfare that rewarded companies who behaved recklessly.
“This bailout was a terrible idea,” wrote Jeffrey Miron, a senior lecturer in economics at Harvard University. “The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.”
According to ProPublica, 927 companies received $606 billion in bailout funds since 2008. Of that money, $365 billion has been paid back and there has been $116 billion in revenues from dividends, interest and other fees. However, companies still owe taxpayers $124 billion.
Two of the biggest taxpayer liabilities are Freddie Mac and Fannie Mae, which still owe taxpayers $41.8 billion and $80.5 billion, respectively. These companies received a separate bailout in 2008, and in 2009 former Treasury Secretary Tim Geithner said that as much as $200 billion would need to be put into each company.
Later that year the funding cap was taken off both Freddie and Fannie, allowing them to receive an unlimited amount of bailout money.
Freddie collected $71.3 billion in taxpayer support and Fannie got $116.1 billion in taxpayer dollars.
ProPublica notes that both Freddie and Fannie began paying the government dividends and each quarter the companies have to make payments based on their net value above capital reserve levels.