US TARP Repayments Top USD250bn

by Mike Godfrey, Tax-News.com, Washington

26 November 2010

The United States Department of the Treasury announced that, after the receipt of the proceeds from the recent initial public offering (IPO) of General Motors (GM), the total amount of Troubled Asset Relief Program (TARP) funds returned to taxpayers now exceeds USD250bn.

Tim Massad, Acting Assistant Secretary for Financial Stability, said that the overall TARP programme is “on track to cost far less than anyone had first anticipated. GM's successful IPO is another important milestone in our efforts to recover TARP funds on behalf of the American taxpayer."

On November 17, the Treasury agreed to sell over 358,500,000 shares of GM common stock. As part of the final settlement of that transaction, the Treasury received USD11.7bn in net proceeds. Those proceeds brought the overall amount of TARP funds returned to taxpayers to USD252bn, including repayments, dividends, interest, cancelled commitments, and other revenues.

In its October 2010 two-year TARP retrospective report, the Treasury estimated that, based on current market prices and the proposed restructuring of AIG, the overall lifetime cost of TARP is expected to be approximately USD50bn.

The Dodd-Frank Wall Street Reform and Consumer Protection Act reduced the maximum authorization for TARP commitments by USD225bn to USD475bn. After also accounting for the TARP funds that have now been returned to taxpayers, nearly 70% of the original USD700bn has been repaid, offset with profits, or cancelled.

It was confirmed that taxpayers will also continue to receive further repayments and profits from TARP investments going forward.

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