One year after the collapse of Lehman Brothers set off a series of federal interventions, the government is the nation's biggest lender, insurer, automaker and guarantor against risk for investors large and small.
Between financial rescue missions and the economic stimulus program, government spending accounts for a bigger share of the nation's economy - 26 percent - than at any time since World War II.
- The government is financing 9 out of 10 new mortgages in the United States.
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- If you buy a car from General Motors, you are buying from a company 60 percent owned by the government.
- If you take out a car loan or run up your credit card, the chances are good that the government is financing both your debt and that of your bank.
- And if you buy life insurance from the American International Group, you will be buying from a company almost 80 percent federally owned.
Where are they now?
American International Group
AIG's government bailout, which began in September 2008, has grown to include government support of all types totaling $180 billion at the end of June, AIG has said. New chief executive Robert H. Benmosche is facing pressure from Fed and Treasury officials, who are desperate to have the insurer repay.
It will probably be several years before the government can begin to sell its stake in General Motors back to the public, and even then, according a report issued last week by the independent monitor of the Troubled Asset Relief Program, some of the $20 billion or so funneled to GM and Chrysler is probably gone forever.
Support for banks
The administration and the Federal Reserve have been more successful than generally recognized at winding down many of the support programs for banks. Nearly three dozen financial institutions have repaid $70 billion in loans to the Treasury, and officials predict $50 billion more will be repaid over the next 18 months. The government has earned a tidy profit on the first round of repayments.
Fannie and Freddie
The Treasury took over Fannie Mae and Freddie Mac, the government-sponsored finance companies that own or have guaranteed more than $5 trillion in mortgages, in the first week of September 2008. Fannie and Freddie now buy or guarantee almost two-thirds of all new mortgages. The Federal Housing Administration guarantees an additional 25 percent.
The Treasury has provided Fannie and Freddie with $95 billion to cover losses tied to soaring default rates and losses in value on their own mortgage portfolios. Analysts predict the companies will need considerably more in the year ahead.
The Fed also is buying almost all the new mortgage-backed securities issued by Fannie Mae, Freddie Mac and the FHA. Buying up those securities drives up their price and pushes down their effective interest rates, and ultimately lowers borrowing costs to home buyers.
- The New York Times