In September 2008, the economy was on the brink of a catastrophic collapse. A broad-based financial panic threatened the jobs and savings of millions of ordinary Americans.
Congress responded by enacting the Troubled Asset Relief Program (TARP) to help break the back of the crisis. At that time, however, many doubted whether TARP would work. And whether Treasury would recover the taxpayer funds committed through the program.
Today, it’s clear that because the Federal government responded with overwhelming speed and force to put out the financial fire through TARP and other emergency financial stability programs, we’re in a much stronger position today than anyone expected. We still have much work to do to repair the damage done by this crisis. Unemployment is still unacceptably high and many are still suffering. But our financial system is much stronger, the cost of borrowing has declined dramatically, and our economy is recovering.
We’ve also been able to wind down TARP and exit our investments at a much faster pace than many had anticipated. The Dodd-Frank Wall Street Reform and Consumer Protection Act reduced the maximum authorization for the program from $700 billion to $475 billion. To date, we’ve recovered more than 75 percent of the total funds disbursed through TARP. In fact, the overall cost of the government’s financial stability initiatives is expected to be much lower than in past crises.
We’ve still got more work ahead of us to wind down TARP. And starting today, we’re unveiling a new feature on our website to help taxpayers follow along – in real time – as we continue exiting our investments and recovering TARP dollars. It’s called the TARP Tracker.
The TARP Tracker and the related Daily TARP Update show where all the TARP dollars went – how much was invested in banks, other financial institutions, the American auto industry, and the credit markets. And you can see how much has come back. We’ll update the TARP Tracker and Daily TARP Update each day with details on our progress toward recovering taxpayer funds and winding down those investments. (The Daily TARP Update also shows the funds committed to foreclosure prevention programs, which, unlike our investment programs, were not intended to be recovered.)
Of course, the goal of TARP wasn’t to make a profit. And for those still suffering from the aftershocks of the crisis, the fact that the cost of TARP will be far less than many expected isn’t much comfort.
But TARP was successful in what it was designed to do – which was to help stop the panic and stabilize the system. And the fact that we’ve made significant progress toward winding down the program and getting taxpayer money back is certainly a positive development. As we continue taking the necessary steps to exit our remaining investments, we invite you to follow along with Treasury’s TARP Tracker and chart our progress.
Timothy Massad is Acting Assistant Secretary for Financial Stability