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US Obtains Further TARP Repayments

by Mike Godfrey,, Washington

17 December 2010

The United States Department of the Treasury announced that the total amount of funds that taxpayers have received in return for their investment in General Motors (GM) under the Troubled Asset Relief Program (TARP) has reached more than USD23bn.

Following on the heels of a successful initial public offering last month of GM common stock held by the Treasury that netted USD13.5bn for taxpayers, a recent repurchase of all the GM preferred stock issued under TARP has repaid a further USD2.1bn.

The Treasury invested USD49.5bn in GM. Taxpayers have now received a total of $23.1 billion in return from GM through repayments, interest, and dividends since the company emerged from bankruptcy in July 2009. Treasury’s remaining stake in GM now consists of some 500m shares.

In addition, it was disclosed that, to date, the Treasury has made disbursements of USD389bn under its TARP authorization. Including the GM preferred share repurchase, TARP repayments (USD231.6bn) and income from dividends, interest, and the sale of other securities (USD34.9bn) now total USD266.5bn.

In its October 2010 Two-year Retrospective on TARP, the Treasury estimated that the lifetime cost of TARP would be approximately USD50bn, out of the USD700bn originally authorized. In addition, the Treasury has calculated that the combined cost of TARP and other Treasury interests in AIG will be about USD30bn. This reduced cost, it is said, reflects higher-than-expected repayments and income, and lower-than-expected spending on the programme as the financial markets have continued to strengthen.

TAGS: tax | investment | economics | fiscal policy | equity investment | United States

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