Posted on 06 Oct 2010
The Treasury Department estimated in a "two-year retrospective report"
that the total final cost to taxpayers of the much-maligned $700 billion
Troubled Asset Relief Program will be around $50 billion, with costs
expected to come from investments in auto companies and a mortgage
Officially expired on Sunday, the two-year TARP program initially used
government money to make capital injections into large and small
financial institutions to stabilize the financial system. Eventually it
expanded into other programs including a spending endeavor seeking to
help lenders and borrowers modify mortgages and avoid foreclosures.
The report released on Tuesday said that Treasury expects the total cost
of all taxpayer-infused financial interventions to limit the financial
crisis, including TARP, will be less than 1% of the U.S. Gross Domestic
According to a recent Treasury transactions report roughly $255 billion
of TARP is still outstanding.Read TARP's latest transactions report
Roughly $70 billion is still outstanding as part of a massive TARP
bailout to keep American International Group Inc. from failing,
according to the Treasury’s transactions report. That amount is still on
the books of the institution for now despite its plan unveiled Thursday
to extricate itself from the injection that saved the insurer at the
height of the financial crisis. However, the Treasury Department said in
its report that taxpayers will likely earn a profit on the investment
the government has made in banks and AIG.
Throughout the report, Treasury touted its TARP program as being
effective in unfreezing the markets for credit and capital and restoring
confidence in the financial system.
According to the report, Treasury plans to finish selling its investment
in Citigroup Inc. early next year. It added that General Motors plan to
hold an initial public offering later in 2010 that will allow the U.S.
to begin to recover additional taxpayer funds.
“General Motors is planning an initial public offering for later this
year that will allow us to begin to sell down, and AIG has announced a
restructuring plan that will accelerate the timeline for repaying the
government and put taxpayers in a considerably stronger position to
recoup our investment in the company,” the report said.
In addition, TARP still has taxpayer-funded infusions in roughly 600
community and regional banks. The Treasury said it is working with the
institutions and regulators to “accelerate repayment where appropriate.”
Fannie and Freddie
According to the report, outside of TARP, the Treasury expects to incur
“substantial” losses from taxpayer injections it provided into housing
refinance giants Fannie Mae and Freddie Mac. The Federal Housing Finance
Agency placed the two mortgage giants into conservatorship in late
"These losses stem from poor credit choices and bad risk management decisions...,” the report said.