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
Investment Partnerships $0 -$1 -$2 $19
Mortgage Programs $16 $16 $16 $7
Total $32 $24 $21 $419

Source: CBO

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.