Dian's Column
Dian's Archive


Everything your ever wanted to know about TARP and then some

By Dian Vujovich

I was not in favor of TARP. Didn’t think it was the individual taxpayer’s role to cover the buffoonery and antics of those in charge of major banks and financial institutions that— in the name of greed and making their boards happy— invested in securities misunderstood by pretty much everyone.

“Let them fail,” was my thinking. After all, no one bails out the small business owner or individual. When things go amuck for them they’re only privy to bankruptcy proceedings that scar their lives and credit reports for years to come. TARP bailouts didn’t carry any of that kind of personal devastation.

That said, looks like TARP didn’t turn out to be the billion dollar gorilla it was first estimated to be back when, with the help of W, the government allotted $700 billion in financial assistance to some of his chums in the banking and financial industries. But when the Troubled Asset Relief Program officially ended on Monday, Oct. 4, the total price tag of it was estimated to be between $30-50 billion.

If you can believe the bean counters, that’s nice. Plus, it’s said that not all of the funds set aside were actually used. Plus plus, word is that the program could/has actually make the taxpayer money. Of course, that remains to be seen, as does an explanation of what happened with the pile of billions that weren’t dispersed.

Unlike that becomes clear, here’s a little look at what happened with some of the TARP funds:

• The Treasury purchased shares of preferred stock in hundreds of banks via a program called the capital purchase program (CPP). Of the $205 billion invested $153 billion has been paid back. The Treasury projects a profit of $16 billion on the CPP and other programs to aid banks.

•AIG received more than $180 billion in support from the Treasury, the Federal Reserve which includes $69 billion in TARP funds. AIG has a plan to convert the Treasury’s preferred shares into common stock, sell it and make a profit. We’ll see.

• $81 billion was invested in the automobile sector—most to General Motors. Sixty-seven billion remains outstanding and the Treasury figures it will lose $17 billion on money given to the auto industry.

• Today the Troubled Asset Relief Program has an $184 billion portfolio of investments in banks, car companies, AIG, toxic assets and debts from Fannie Mae and Freddie Mac.

Now matter what you think of TARP, or President’s Bush or Obama’s hand in it, or whether or not the program was really necessary, it seems to have cost much less than originally anticipated. And that’s a very good thing.

For details, here’s a link to the 90-some page U.S.Treasury’s “Troubled Asset Relief Program: Two Year Perspective” cut and paste this:

To read more articles, please visit the column archive.

[ top ]