Treasury: 99% of TARP investments paid back
Six more financial institutions paid back their bailout through the Troubled Asset Relief Program Wednesday. The Treasury Department said 99% of the funds are now returned.
Congress cleared the Troubled Asset Relief Program in October 2008 to spend $700 billion buying preferred stock through the Capital Purchase Program and toxic holdings such as residential mortgage-backed securities from the nation's largest financial firms.
The Treasury ended up disbursing $245 billion in bank investments, and $244 billion has been repaid. It currently estimates that these specific programs under TARP will yield $20 billion in profit to taxpayers. But, including foreclosure prevention and other initiatives, TARP will cost taxpayers roughly $25 billion, according to the Congressional Budget Office.
Fifth Third Bancorp ($18.10 -0.3%) repurchased 43.6 million warrants to purchase common stock. In February, it repaid its $3.4 billion in outstanding CPP preferred shares. Total proceeds from Fifth Third reached $280 million, according to the Treasury.
National Penn Bachshares and Lakeland Bancorp also repurchased a total of $170 million in shares and paid a just over $700,000 in dividends to the Treasury for a total of $170.7 million in proceeds.
Stockmens Financial Corp., Bridge Capital Holdings and Heritage Bankshares repurchased a total of $23.1 million in shares. However, the Treasury still holds $7.5 million shares in Heritage. Total proceeds from these three will be $23.9 million.
The Congressional Oversight Panel gave few compliments to the Treasury for TARP, insisting that the foreclosure prevention programs underwhelmed and the stock and toxic asset purchases will only urge companies to continue taking these risks. The Treasury maintains, however, that because of the tools provided to regulators under the Dodd-Frank Act, these companies should not expect such a bailout again.
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