Posted on 22 Apr 2010
The Obama administration expects to continue to wind down the extraordinary government programs put in place at the height of the financial crisis, a top official said Thursday, though programs for homeowners and small businesses will remain in place.
Herbert Allison Jr., the Treasury Department's assistant secretary for financial stability, told a U.S. House panel the government expects to make a profit on its investments in the banking industry as well as its program to stabilize the asset-backed securities market. These are part of the Troubled Asset Relief Program, or TARP.
"Most of the TARP programs have ended or are ending, and our focus has shifted to continuing our careful management of those investments, protecting homeowners and stimulating small business lending," Mr. Allison said in prepared remarks.
Despite the government's positive investments made through the $700 billion TARP for banks, taxpayers could still face a loss on the program. The administration expects the total cost of TARP to be less than $127 billion, though Mr. Allison said improvements at American International Group Inc. and General Motors Co. could change that figure.
"We expect that the cost could come down further," he said. "We've been encouraged by developments at AIG and General Motors."
The White House has also urged Congress to pass legislation that would pay for any losses incurred through the program by assessing a fee on the nation's financial-services firms.
Mr. Allison said the Treasury has turned its focus to programs intended to help struggling homeowners and helping small businesses still having trouble accessing credit. He said the administration still expects to use all of the $50 billion it has earmarked for foreclosure prevention efforts, and reiterated calls for lawmakers to pass a new $30 billion fund to provide lending to small businesses.
He also expressed optimism that access to credit should improve.
"We've been told by banks as recently as last week that they intend to increase lending ... this year," Mr. Allison told the panel of lawmakers.