The Status of TARP
by Craig G. Ferguson

Being a Democrat, I could not help wondering if the general perception of the Obama administration’s excessive spending was, in fact, an unquestioned, and unfounded myth or distortion.  The most obvious object of popular criticism is the spending associated with the Administration’s effort to stabilize the economy.

The Emergency Economic Stabilization Act of 2008 gave rise to the TARP (Troubled Asset Relief) Program to stabilize the nation’s banks, including bank-held mortgages, loans to GM and Chrysler, the insurance giant AIG, as well as Citibank and the Home Affordable Modification Program, aimed at reducing the number of mortgage foreclosures. 

The other major component of this effort, the Stimulus Package, is intended to help fund state budgets, road, bridge, and other building projects, and certain healthcare needs. George W. Bush signed the TARP program into law in 2008. The total authorized cost of the combined programs? $700 billion.

Here is the latest and best free information on the status of the TARP portion of the Obama economic stabilization program I was able to find on the Internet:

  • As of August 18th, 2011, Insurance giant AIG has repaid an additional $2.1 billion of the TARP loan by the U.S. Treasury. This brings AIG’s repayment total to $11.4 billion, roughly 17%, of the $68 billion bailout, according to The Huffington Post.

  • As of August 23, 2011, banks with troubled assets have repaid $176,624,527,562 – 72 percent of the $245 billion bank bailout (ibanknet.com).

  • An August 25, 2011 Associated Press story reports that, of the original $13.5 billion Chrysler bailout, $11.2 billion has been repaid. The U.S. Treasury Department says it is unlikely to recover the remaining $1.3 billion.                             

  • On June 2, 2011, The Washington Times reported that, according to the watchdog Competitive Enterprise Group, GM used $4.7 billion from an escrow account, part of the carmaker’s bailout funding, to pay off its government loan.  A common sense conclusion is that GM still owes $4.7 billion.  Further investigation will show whether, by a miracle of accounting, that counts as a loan payoff

  •  An August 25, 2011 New York Times article, summarizing a Department of Treasury report of TARP and Stimulus funding status, offers several interesting facts and opinions.

    • Though the Treasury was authorized to use $700 billion, the Department actually handed out $387 billion.

    • The Congressional Budget Office estimated, in November, 2010, that the final cost to taxpayers would be $25 billion.  This estimate assumes that AIG and the automakers will remain profitable. Where the Treasury bought corporate shares in these companies, it is expected that the securities will sell at a good price.

    • The estimated losses of the Home Affordable Modification Program, to curb the number of mortgage foreclosures, is expected to total     $46 billion.

It’s important to remember that this is an ongoing process. What I’ve reported here is at best a middle-of-the-game scorecard. I think that people generally prefer discrete events with well defined beginnings and endings. But, as Yogi Berra once said, “It ain’t over til it’s all over.”

Comment on this Commentary - Comments should be directed to Ken Ralph, Editor of LCDC Media at his email address. Comments will be posted here.

 

 

Craig G. Ferguson

The opinions expressed here are those of the author alone and are not the official position of the
Lancaster County Democratic Committee.