So far, so good. The taxpayers are reaping a nice little profit from the bailout of the banks last fall, according to The New York Times. The paper reports that eight of the biggest banks have fully repaid their bailouts, for a total of $4 billion — or an annual rate of return of 15 percent.
That’s a return Bernie Madoff would have envied.
And a whole lot better than many bailout critics were predicting. (You’d think the Obama administration would be out there trumpeting this success.)
These are early results, of course. Citigroup and Bank of America still haven’t repaid their bailout money; they’ve got a ways to go before their balance sheets look healthy enough for them to do so. Still, the early profits are a lot better than Congress and the Treasury Department dared to hope a year ago, when they launched the bailout of the banks to try to unlock the frozen credit system.
The cloud hovering around this silver lining might be this: Moral hazard. Because former Treasury