Math Not Included

I frequently take jabs at the New York Times economic reporting, but today they reached a new low:

As Big Banks Repay Bailout Money, U.S. Sees a Profit

Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in
aid that many critics thought might never be seen again.

The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

Sounds great right? Four billion is a nice little profit, that is until you reach the end of the story.

But all the profits taxpayers have won could still be wiped out by two deeply troubled institutions. Both Citigroup and Bank of America are still holding mortgages and other loans that were once worth billions of dollars but whose revised values are uncertain. If they prove “toxic” because they cannot attract buyers, they could leave large holes in the banks’ balance sheets.

Neither bank is ready to repay its bailout money anytime soon, even though the banks’ stock prices have surged in the last month, leaving the government sitting on paper profits of about $18 billion between them.

This story conveniently leaves out the fact that Citigroup and Bank of America recieved $45 billion each in bailouts, plus federal asset guarantees of over $400 billion combined.

According to my math, we are still at least $86 billion in the red, and that's assuming all the federally guaranteed assets sell at the price they were purchased, which they won't.

Oh, and let's not forget about the hundred's of billions we are on the hook for at AIG, Fannie Mae, Freddie Mac, GM, and Chrysler.

But according to the Times this equals a $4 billion profit.

This story only strengthens what Paul Krugman has been proving for years: at the New York Times, math is irrelevant when you've got a political agenda to push.