AIG Drives TARP Estimate Lower

The CBO has released its newest estimate of the Troubled Asset Relief Program (TARP), showing that it would cost taxpayers a total of $24 billion. This is $8 billion lower than their last estimate done in March.

As you can see in the table below, the decrease in the subsidy cost estimate was driven by a lower estimated cost for AIG assistance. Treasury has sold a large chunk of its holdings of AIG common stock since March, and the increase in share prices since March has led to the declining cost, as we speculated might happen last month. 

Subsidy Cost Estimate (billions)
Area December 2011 March 2012 October 2012 Maximum Amount Disbursed
Capital Purchase Program -17 -17 -18 205
Citigroup and Bank of America -8 -8 -8 40
Community Development Capital Initiative 0 0 0 1
Assistance to AIG 25 22 14 68
Subtotal, Financial Institutions 1 -3 -11 313
Auto Company Assistance 20 19 20 80
Investment Partnerships 0 0 -1 19
Mortgage Programs 13 16 16 5
Total 34 32 24 417

Source: CBO
Note: Numbers may not add up due to rounding

Most of the other categories in the TARP estimate remained constant. Any further movement will likely come from either the auto companies, the mortgage programs, or AIG, since the other programs have mostly wound down. This report showed the good news that AIG's bailout will cost significantly less than anticipated, driving down the overall cost of TARP.

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