Treasury Reduces TARP Cost by $11.4bn
The Treasury Department cut the projected cost of the Troubled Asset Relief Program (TARP) by $11.4bn to a total of $105.4bn. Congress authorized TARP under the Emergency Economic Stabilization Act of 2008 to provide some stability to the ailing financial industry. Last August, the Obama Administration estimated the cost of TARP to be $341bn. The Making Home Affordable (MHA) program, which includes the Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives (HAFA) program operates under TARP. In March 2010, the Treasury told Congress the cost of HAMP would be $22bn compared to the $75bn initially planned. Herb Allison, assistant secretary for financial stability at the Treasury, wrote in a letter to Congress that TARP repayments have been greater than first thought. Roughly $190bn has already been repaid, and the values of some investments have increased. But the biggest decreases came as the 7.7bn shares of Citigroup stock held by the Treasury increased to a market value of $4.05 a share. It’s grown $0.80 since the shares were converted to common equity by the Treasury. According to the Treasury, the cost related to the bailout of American International Group (AIG) dropped by $2.9bn as “the prospects for the company have improved.” The Treasury plans to provide updated cost assessments four times per year, measuring the TARP cost to taxpayers. Write to Jon Prior.