Treasury: Bailout Will Cost Taxpayers 85% Less Than Expected
Oct 5th 2010 8:30PM
Updated Oct 5th 2010 8:46PM
The federal bailout program, also known as the Troubled Asset Relief Program or TARP, will end up costing U.S. taxpayers approximately 85% less than originally expected, according to a U.S. Treasury Department report released Tuesday.
The bill will come to about $50 billion, far less than the $350 billion that the Congressional Budget Office initially estimated when the program was enacted two years ago. And if additional items that offset the cost -- such as the Treasury's interests in insurance giant American International Group (AIG), which was recently restructured -- are factored in, the bill falls to about $30 billion.
"TARP has been unpopular for good reason -- no one likes using tax dollars to rescue financial institutions," wrote Timothy G. Massad, the Treasury Department's acting assistant secretary for financial stability, in the 98-page report. "However, by objective measures, TARP worked."
Enacted by the George W. Bush administration, TARP has drawn criticism for what many believe was an unproductive bailout for fiscally irresponsible financial institutions. In April, Pew Research reported that just 42% of Americans believed TARP helped prevent a more severe financial crisis, while the rest either said it didn't help or they didn't know.
TARP will incur a $46 billion loss from its housing programs, while realizing a $16 billion gain from its bank programs. And with the Treasury's 563 million shares of AIG, TARP will see an income of about $22 billion (at Oct. 1 stock prices) from its investment in the insurance giant, according to the report.