Though the average American was appalled at fat cat bankers on Wall Street getting taxpayer-funded bailouts, from which they then handed themselves bonuses—when AIG did the same with traders after its government-funded bailout of, eventually, $182.3 billion, President Obama called it an “outrage”—by all accounts the move appears to have paid off. Certainly, the global economy that looked all set to implode when the $14 trillion US economy looked like it was going into a freefall (to use Joseph Stiglitz’s term) looks a lot safer with the US growing at 2.4% in 2010, 1.8% in 2011 and averaging 2% in the first 3 quarters of 2012. And buoyed by the most recent sale of the AIG equity held by the US government—at one point, it owned as much as 92% of AIG—the American taxpayer has made a profit of $20 billion on this transaction. For the record, some argue the figure is a fiction since it doesn’t include billions of dollars of future tax writeoffs that AIG has been promised. But compare this with the effect of an insurer like AIG going under on global insurance and finance markets, the cost has been worth it.
Indeed, at the end of the AIG sale, the American taxpayer appears to be out just $70 billion or so—of the $466 billion disbursed under TARP since 2008, around $390 billion has been recovered. Interestingly, while Wall Street has returned a modest profit to the American taxpayer—as compared to $250 billion given to banks, around $267