CBO's Latest Estimate of TARP: $27 Billion

Caught up in the release of CBO's baseline and its analysis of the President's budget last week was another CBO update of their estimate of the Troubled Asset Relief Program (TARP). The subsidy estimate for the entire program is in line with analyses of previous years, showing a total net cost of $27 billion. The estimates have been much less than the $356 billion peak cost estimate CBO had in April 2009 and the $700 billion of total funds approved. The $27 billion total is $6 billion higher than the previous estimate of $21 billion.

The main reason for the shift is a $10 billion increase in the estimated cost of housing programs due to the Administration's extension of the Home Affordable Modification Program (HAMP) through December 2015. CBO also apparently incorporates the possibility of further extensions into their estimate.

Somewhat offsetting that increase is a $3 billion drop in the cost of automaker assistance programs. This is due to a rise in the value of Treasury's investments in Ally Financial (formerly GMAC), since the company's stock price has risen since the last estimate almost a year ago. In addition, smaller investment partnerships are expected to gain $2 billion more than previously expected.

Subsidy Cost Estimate (billions)
Area October 2012 May 2013 April 2014 Maximum Amount Disbursed
Capital Purchase Program -$18 -$17 -$17 $205
Citigroup and Bank of America -$8 -$8 -$8 $40
Community Development Capital Initiative $0 $0 $0 $1
Assistance to AIG $14 $15 $15 $68
Subtotal, Financial Institutions -$11 -$10 -$9 $313
Auto Company Assistance $20 $17 $14 $80
Investment Partnerships -$1 -$2 -$4 $19
Mortgage Programs $16 $16 $26 $11
Total $24 $21  $27 $423

Source: CBO

With the assistance to larger financial institutions basically wound down, most of the remaining movement in the cost of TARP will come from the programs mentioned above. It seems likely, though, that the ultimate cost of TARP will be in the $20-$30 billion range.