The $21 Billion TARP
Yesterday, the CBO released its latest estimate of the subsidy cost of the Troubled Asset Relief Program (TARP). The estimate serves as a demonstration of how little of TARP is still operating in a major fashion, as most of the cost has not changed since the last score in October 2012. The overall cost of TARP dropped from $24 billion (the previous estimate in October 2012).
The main movement comes from the auto industry assistance, which dropped from an estimated cost of $20 billion to $17 billion. This movement is not particularly surprising since GM's share price has risen significantly -- about 40 percent -- since October 2012. Thus, the federal government's gains on its remaining holdings in GM will be greater than previously expected.
|Subsidy Cost Estimate (billions)|
|Area||March 2012||October 2012||May 2013||Maximum Amount Disbursed|
|Capital Purchase Program||-$17||-$18||-$17||$205|
|Citigroup and Bank of America||-$8||-$8||-$8||$40|
|Community Development Capital Initiative||$0||$0||$0||$1|
|Assistance to AIG||$22||$14||$15||$68|
|Subtotal, Financial Institutions||-$3||-$11||-$10||$313|
|Auto Company Assistance||$19||$20||$17||$80|
Most of the rest of TARP has largely stayed the same. The net gain from financial institutions -- the net of the Capital Purchase Program (the original centerpiece of TARP), support for Citigroup and Bank of America, and the cost of supporting AIG -- fell by $1 billion while the gain from investment partnerships went up by $1 billion.
Estimates for TARP continue to fall from the original score and it looks as if the loss to the federal government will be small, an unexpected but welcomed development.