Overall, to date, we’ve recovered nearly 93 percent ($387
billion) of the funds disbursed for TARP ($418 billion). And we expect further
income for taxpayers from the program moving forward.
In 2012, Treasury continued making significant progress
winding down TARP – collecting nearly $70 billion in additional repayments and other
income. Indeed, during the last year, we saw a number of important milestones,
including the sale of our final shares
of AIG common stock, Treasury’s announcement that it intends to exit
its remaining investment in General Motors within the next 12-15 months
(subject to market conditions), and other key transactions.
As we begin 2013, we thought it would be good opportunity to
provide an update on our exit strategy for our remaining TARP investments –
There’s more work to be done, but we’re moving toward the
finish line as we continue winding down TARP.
TARP’s five bank investment programs have earned a
significant profit for taxpayers. To date, we’ve recovered $268 billion through
repayments and other income, which represents a positive return of more than
$23 billion compared to the amount ($245 billion) initially invested.
In May 2012, Treasury outlined its exit
strategy for the remaining investments in TARP’s largest bank program, the Capital Purchase Program (CPP). Treasury
is winding down its remaining stakes through a combination of repayments,
restructurings, and sales.
In December 2012, we provided an
update on Treasury’s CPP wind down – which detailed how we had reduced our
portfolio by more than 140 institutions and $8 billion through the means we
outlined in May 2012. In
that same update, we also announced our intention to auction approximately
two-thirds of our remaining CPP investments during 2013. Those auctions,
together with additional repayments and a limited number of restructurings,
should enable us to continue to make substantial progress in winding down the
Treasury has already closed three bank programs. Taxpayers
realized profits on both the Targeted
Investment Program (TIP) and the
Asset Guarantee Program (AGP). No funding
was ever disbursed under the Capital Assistance
Program (CAP), which was part of the successful stress test process federal
banking regulators conducted in 2009.
The final bank investment program is the Community Development Capital Initiative
(CDCI), under which Treasury holds investments of approximately $533
million, which represents less than one percent of the overall funds provided
through TARP's bank programs. These
investments are in 77 community development financial institutions which serve
lower and moderate-income communities that are underserved by traditional financial
institutions. As we previously
stated, Treasury will announce its wind down plans for this program at a
Treasury has already recovered more than 90 percent of the
funds disbursed through TARP’s credit market programs and expects to realize a
gain on these programs.
Last week, Treasury announced the full
repayment with interest of its loans under the Term Asset-backed Securities Lending Facility (TALF) – a joint
program with the Federal Reserve that helped support the markets for auto
loans, student loans, credit cards, small business loans and other types of
consumer lending. Treasury’s remaining credit support for the program was also
eliminated. The amount of fees
collected ($856 million) through the program exceed the remaining loans
outstanding ($556 million), which means that there is no risk of taxpayer
losses. At this point, each additional dollar recovered represents an
additional dollar of profit for taxpayers on TALF.
In January 2012, Treasury completed
the wind down of its SBA 7(a)
Securities Purchase Program. Treasury recovered $376 million over the life
of the program, representing a gain of approximately $8 million to taxpayers on
Treasury’s original investment of $368 million.
As of December 31, 2012, Public Private Investment Program (PPIP) fund managers cannot make
any new investments under the program. To date, Treasury has recovered 93
percent of the funds disbursed though PPIP – and taxpayers are currently
expected to earn an overall lifetime gain on the program. Five of the nine PPIP
funds have already been wound down at a profit for taxpayers. The total
investments outstanding for the remaining four PPIP funds also continue to
decline. Consistent with the terms of the program, individual fund managers
will make independent determinations about how quickly those remaining four
funds are wound down.
To date, we’ve recovered more than half of the TARP funds
invested to prevent the collapse of the American auto industry. According to
independent estimates, those investments saved more than one million jobs. And
since the rescue, the auto industry has added more than a quarter of a million
In July 2012, Treasury fully
exited its investment in Chrysler
Group LLC. Treasury recovered more than 90 percent of the funds committed to
By the end of 2012, Treasury had sold more than two-thirds
(612 million shares) of the shares of General
Motors common stock it originally held (912 million shares). In December
2012, Treasury announced its intention to fully
exit its remaining investment (300 million shares) in GM within 12-15 months,
subject to market conditions. In January 2013, Treasury entered into a
prearranged written trading
plan to proceed with that December 2012 announcement.
Our only other outstanding auto-related investment is in Ally Financial. We outlined
our exit strategy for that investment in May 2012. Treasury has already
recovered about one-third of the total $17 billion invested, and it expects to
begin to monetize its remaining investment as the company completes two
critical strategic initiatives; the chapter 11 proceeding for its mortgage
subsidiary, Residential Capital, and the sale of its international auto finance
operations. Indeed, in November 2012, Ally announced that it had reached an
agreement to sell its remaining international operations and that it expected
total proceeds from those transactions of $9.2
In December 2012, Treasury announced the sale of its final shares
of AIG common stock. Overall,
Treasury and the Federal Reserve fully recovered the combined $182 billion
committed to stabilize the company during the financial crisis – plus an
additional $22.7 billion positive return for taxpayers.
During 2013, we expect to make significant additional
progress winding down TARP’s investment programs and recovering taxpayer
also continue to expect that the financial stability programs that Treasury,
the Federal Reserve, and the FDIC put in place during the crisis are likely to
result in an overall
positive financial return for taxpayers.
Timothy G. Massad is the Assistant Secretary for Financial Stability at the U.S. Department of the Treasury.
Unlike TARP’s investment programs, funds disbursed through TARP's
housing programs to assist struggling homeowners at risk of foreclosure are not
intended to be recovered. Eligible individuals can apply to participate in the
Making Home Affordable Program through December 31, 2013, or to certain state
foreclosure prevention programs in participating states through the Hardest-Hit