In this 2008 file photo, President George W. Bush (second from the left,… (Win McNamee / Getty Images )
WASHINGTON — The financial crisis and the Great Recession have taken a heavy toll on the U.S., and now one public interest group said it has calculated that cost: at least $12.8 trillion.
The estimate from Better Markets, which supports tougher financial regulations, came in a 72-page report released Wednesday, just days before the four-year anniversary of the collapse of Lehman Bros.
That failure triggered the crisis, which dramatically exacerbated the recession that began in late 2007.
"People actually shouldn't be surprised there is a big number when you're adding up the costs of what's happened to this country," said Dennis Kelleher, Better Markets' chief executive. "Wall Street and its many allies and sympathizers are denying and understating the cost of the crisis to kill, weaken and avoid regulation."
Kelleher said he hopes the report will be used to offset complaints by Wall Street about the cost of new regulations spurred by the crisis.
The report tries to calculate the effect of the crisis and the recession in terms of reduced economic output and the costs of stabilizing the markets and bailing out banks and large financial firms.
The estimate builds off previous calculations, including one by economists Alan S. Blinder and Mark Zandi. They released a report in 2010 estimating the total budgetary cost of the financial crisis at $2.35 trillion.
Better Markets used that amount as a jumping-off point for what it said was a conservative estimate of the true costs of the crisis.
The group estimated the loss in gross domestic product from 2008 to 2018 will be $7.6 trillion.
Then they used the estimates of Blinder and Zandi to add an additional figure — an estimate of how much GDP loss was avoided by government bailouts and other interventions. That figure was $5.2 trillion from 2008 to 2012.
Better Markets did not calculate the cost of the government bailouts, such as the rescue of American International Group Inc., which the Treasury Department said this week would produce a profit of at least $15.1 billion.
Instead, the group decided to use the estimate of how much of a hit to GDP was avoided by the bailouts as a component of the cost of the economic problems.
Kelleher said the $12.8 trillion total understates the overall costs of the crisis because it does not include other factors, such as the loss of home equity from the collapse of the housing market.