A year after TARP recipients began receiving billions of dollars from the government, the long-term effects of the program can be assessed only through the patchwork of earnings announcements and the tenuous web of investor confidence.  The DOW’s daily flirtation with its long-lost lover, the 10,000 mark, has cooled noticeably since a mid-October high.  More importantly for our purposes, however, is the recent news that CIT Group (CIT) filed for bankruptcy after receiving 2.3 billion dollars from the government bailout program.  In less than a year, the taxpayer money spent to keep them afloat—nearly $8 for every man, woman, and child in the United States—proved inadequate.

Unfortunately, such stories loom on the horizon for many of the banks and automakers bailed out by the TARP programs of the past 12 months.  Nearly a billion dollars of third quarter profit from Ford (F) (which accepted no bailout money, remember) isn’t enough to dress up the sobering news that other companies are bound to fail.  Has anti-bailout sentiment hurt companies who accepted TARP funds?  Let’s look at the report card and find out.

Fannie Mae (FNM) and Freddie Mac (FNM) continue to falter throughout the third quarter, and confidence has waned substantially.  The $1.84 benchmark of mid-October for Freddie fell to a Halloween one-month low of $1.10 and continues to fall consistently below the $1.25 mark through November.  Mid-October highs for Fannie of above $1.50 have given way to lows around $1.00 in early November, a fall which continues to reflect the nearly 50 cent drop Fannie experienced between October 15 and 16. Second quarter losses and an additional $11 billion request for help have further sullied the already bad reputation of Fannie Mae. Notwithstanding the 10,000 mark of the DOW, confidence in these government-sponsored enterprises has dropped significantly, perhaps signaling the unforgiveness of investors as companies that did not accept bailout money seem to flourish.  Commentators meanwhile seem to want the government to pull support.  The third quarter report cards for Frannie and Freddie record solid D+ scores.

An increase in the estimated value of AIG portfolios bodes well for the time being, as the company seems to be dragging itself out of the mid-summer hole that severely devalued the price of its shares.  Bank of America’s (BAC) $1.8 billion loss in January doesn’t seem to matter as much as it did early in 2009 as the $2 billion auto trust deal was sold in early November, despite losses.  Credit concerns over Wells-Fargo haven’t exactly been alleviated in spite of profits due to possibly unsustainable “interest only” mortgage payments.  Financial institutions, on the whole, receive a charitable C-grade from their teachers: although they’re not doing great, they bear a chance of making it through the term.

Things don’t look much better on the auto front.  The mortgage lending unit for Chrysler and General Motors (GMAC) reported quarterly losses on Wednesday in the midst of mounting loan problems in its mortgage lending unit.  Chrysler, of course, continues to struggle while hoping for help from Fiat.  Automakers do not look “robust” in spite of the peaks that have offset recent troughs in investor confidence.  Mid-October was good to the market—it is becoming clear, however, that the anticipation of good news in the form of earnings announcements outweighed the power of the announcements themselves.  Auto companies receive the same lukewarm C that the teacher relentingly awarded financial institutions.

Taxpayers seem to be wising up to the fact that bailout money has not translated into financial success at this point in the game.  The optimistic outlook touted at TradeKing and elsewhere a few short weeks ago haven’t necessarily given way to total losses—it has simply sobered up in the face of lukewarm gains.  While the invisible hand of the market may yet correct TARP missteps, the past year has demonstrated that the next year of market stability is contingent upon solid earnings.  If bailout companies can’t produce, confidence simply won’t grow more than a hopeful quarter at a time.