Out of the total $700B TARP bailout, approximately $205B were disbursed to the banks through the Capital Purchase Program (CPP). Of that $205B, roughly $150B has actually been paid back. One of the dirty secrets of the bailout, though, is that Treasury and the Federal Reserve found a way to give the banks money without any approval or oversight from Congress or anyone else.
By keeping short-term interest rates close to zero for the last two years, the Fed has enabled the banks to drastically reduce their interest expense on deposits, thereby inflating bank earnings by tens of billions of dollars each of the past two years. There's nothing wrong with banks earning a profit, but the banks' reduced interest expense comes right out of your pocket. The less you earn on your savings account or CD's, the more money the banks make -- and it's all because of this deliberate gift from the Fed.
According to the FDIC's latest figures, there are approximately $7.7T in interest-bearing deposits in US banks. This figure is little changed from year-end 2008, when US banks held approximately $7.6T in deposits. In other words, there are slightly more deposits being held now than two years ago just after the crisis hit, but the total amount of interest banks have paid on deposits has changed dramatically over the past three years:
- 2008 $166B Paid in Interest on Deposits
- 2009 $99B Paid in Interest on Deposits
- 2010 $67B Paid in Interest on Deposits
Go here to access the FDIC's reports (Standard Report #3 will give you the industry-wide totals):