Treasury Notes

 3 Conclusions on TARP 8 Years Later

By: Rob Runyan

Eight years ago today, the Emergency Economic Stabilization Act of 2008 became law, putting the Troubled Asset Relief Program (TARP) into effect. Over the months and years that followed, Treasury has managed this unprecedented program to stabilize the economy and strengthen the recovery in ways few thought possible on October 3, 2008.
On this eighth anniversary, we are reminded that this program was not only central to avoiding a financial collapse and getting the economy growing again, but that it also returned more money to taxpayers than they invested. To date, a total of $433.7 billion has been disbursed under TARP. As of August 31, cumulative collections under TARP, together with Treasury’s additional proceeds from the sale of non-TARP shares of AIG, total $442.1 billion, exceeding disbursements by $8.4 billion. A program that some once feared would lose taxpayers hundreds of billions of dollars has generated a positive return. That’s a testament to TARP’s implementation but also to the other support provided to get the economy growing—including the Recovery Act and a dozen additional fiscal measures passed from 2009 to 2012.
But American taxpayers got more than just their money back with TARP too.
Through Making Home Affordable (MHA), nearly 2.7 million assistance actions have helped homeowners avoid foreclosure, which in turn helped millions of their neighbors and communities by stabilizing home prices that typically fall with foreclosures.
The Home Affordable Modification Program (HAMP) – the first and largest MHA program – has helped to establish a standard for mortgage modifications focused on payment reduction that has been adopted by the industry and will help homeowners avoid foreclosure long after HAMP retires.
The Hardest Hit Fund (HHF) program was created in 2010 to provide $7.6 billion in TARP funds in targeted assistance to 18 states and the District of Columbia deemed hardest hit by the economic and housing market downturn. Recognizing the success of the program in stabilizing neighborhoods in these hard hit communities, Congress gave Treasury the authority to allocate an additional $2 billion late last year and the program will now continue to the end of 2020. While the housing market has strengthened across the country, HHF provides much-needed funding that will continue to help these hardest-hit communities recover.
While no more taxpayer money is being invested in banks under TARP, taxpayers are still receiving a return from the investments they made to stabilize the American banking system. TARP’s bank programs have recovered $275 billion through repayments and other income, $30 billion more than originally invested. We continue to exit our investments and replace temporary government support with private capital. Under the Capital Purchase Program, Treasury invested in 707 financial institutions, 695 of which have exited the program. The impact of TARP doesn’t stop there. TARP investments helped to jumpstart the credit markets and save an estimated one million jobs in the American auto industry – an industry seeing record sales in recent years.
As we look back on these results eight years later, with many of the TARP programs wound down, and assess the legacy of this historic government action, there are three clear takeaways: 1) TARP was instrumental in turning a collapsing economy around; 2) Treasury disbursed less in TARP support than was initially anticipated and even generated a positive return for taxpayers; and 3) TARP housing programs helped millions of Americans get back on their feet after the greatest economic downturn since the Great Depression and will continue to help homeowners in the years to come.
Rob Runyan is a spokesperson at the U.S. Treasury Department.​​​
Posted in:  TARP
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